CalculatedRiskBlog tells us about a new major study of American workers and their retirement plans. The study is published by the Transamerica Center for Retirement Studies [note for students: the center is an excellent source of research data and analysis]. CalculatedRisks summarizes:
From Rachel Ensign at the WSJ: For Many Seniors, There May Be No Retirement
Already battered nest eggs took another beating this month with the market’s wild swings. With interest rates essentially at zero since 2008, income from Treasurys and certificates of deposit is pretty paltry. … On top of that, housing prices [leave] homeowners with much less equity to tap.
Here is the survey mentioned in the article: The New Retirement: Working
• The survey found that for many Americans, the foundation of their retirement strategy is simply not to retire, to work considerably longer than the traditionalretirement age, or work in retirement:
–39 percent of workers plan to work past age 70 or do not plan to retire
–54 percent of workers expect to plan to continue working when they retire
–40 percent now expect to work longer and retire at an older age since the recession
• Workers’ greatest fears about retirement include “outliving my savings and investments” and “not being able to meet the financial needs of my family.”
• Most workers will continue working out of financial necessity:
–Workers estimate their retirement savings needs at $600,000 (median), but in comparison, fewer than one-third (30 percent) have currently saved more than $100,000 in all household retirement accounts
–Most workers, regardless of age or household income, agree that they could work until age 65 and still not have enough money saved to meet their retirement needs
–Of those who plan on working past the traditional retirement age of 65, the most commonly cited reasons are of need versus choice
–Many workers (31 percent) anticipate that they will need to provide financial support to family members
When I looked at the report myself, I was struck by this line in the executive summary:
Workers’ greatest fears about retirement include “outliving my savings and investments” and “not being able to meet the financial needs of my family.”
This is related to the point I’ve tried to make in the past (and also here and here): Social Security is not a pension plan. Social Security is an insurance program that insures all of us against the possibility of “outliving our savings and investments”. It is particularly disturbing to hear politicians and those least likely to outlive their investments be in such a hurry to cut Social Security (or Medicare) at a time when uncertainty about investments and savings is rising (just look at the uncertain stock market and housing markets)!
One thought on “Not Retiring Is the New Retirement Plan For Many”
Given the current economy, “not retiring” just might be the patriotic thing to do.
It is patriotic in these ways:
1-There are more employed workers paying taxes to pay for government services.
2-More workers paying more taxes reduces state and federal deficits.
3-It reduces spending for Social Security and Medicare benefits, both programs are already overstretched.
4-It keeps more workers active in the workforce which is good for the economy.
5-It helps keep up national productivity.
We will eventually extricate ourselves from this economic pickle and when we do those folks will be much wealthier and that will make them consumers with more money to spend.
Its a win-win situation.
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