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Retirement for baby boomers is a moving target

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By Diane Stafford
The Kansas City Star
Published:
Just how much the recession reshaped what many baby boomers thought retirement would look like is becoming clearer: More than ever they now expect to retire later or work when they're "retired."
In 1991, just one in 10 workers told the Employee Benefit Research Institute that they planned to wait to retire until they were older than 65. By 2007, three in 10 said that.
This year? More than four in 10.
Boomers cruising toward a traditional retirement suffered a financial comeuppance in the prolonged economic slump that began in late 2007. The downturn sapped jobs, stock and housing values, and interest on savings.
Many were also caught in the shift from defined-benefit pension plans to 401(k) plans that required workers to contribute toward their own retirement savings. Some didn't, a choice that will leave them short financially.
Small wonder that, according to the Pew Research Center, boomers are the gloomiest of all age groups about the health and future of their finances. Boomers were more likely than other age groups to tell Pew researchers that they lost money on investments since the recession hit. Nearly six in 10 said their household finances worsened.
Finally, employment-based health insurance for many retirees has been withering away, which is causing older workers to cling to paychecks.
Overall, the stage is set for a new normal: Working in retirement.
The number of older workers has grown more rapidly than any other age group in the past few years. This year, 18.6 percent of those 65 and older were participating in the labor force, compared with 13 percent in 2002.
At the same time, older workers represent a disproportionately large share -- 40 percent -- of people who have been trying to get back into the workforce for at least a year.
The scramble for re-employment is made more desperate for some who fight age discrimination and outdated skills.
"The prospects are dim for older workers who lose their jobs," said Christine Owens, executive director of the National Employment Law Project. "They have the highest rates of long-term unemployment of any age group."
Demographers warned for years about social and economic stress when baby boomers began "retiring in droves." After all, boomers -- representing slightly more than one-fourth of the U.S. population -- are hitting age 65 at the rate of 10,000 a day. One in every four 65-year-olds today will live past age 90, and one in 10 will live past 95.
That's a long time to be retired. And it's guaranteed to stress the Social Security and Medicare systems. Younger age groups, needed to keep paying into the system, aren't as big as the boomer group that will draw benefits in ever-greater numbers.
Still, the prototypical retirement reigns in America.
As the nation's largest generation noses toward Medicare eligibility at age 65 and full Social Security benefits at age 66, about two-thirds of the boomers are continuing a longstanding American trend of "early" retirement before they reach those landmarks.
Their homes are paid for, they have money in the bank, and they are realizing their leisure plans.
They're happy to say goodbye to their jobs.
However, the Employee Benefit Research Institute finds that today's near-retirees are more likely than ever before to expect to continue working for pay beyond their "official" retirement.
Social Security remains most boomers' hope for retirement income. On average, U.S. workers are beginning to take their Social Security benefits at age 63.8. That average fell by more than five years between 1945 and 1970.
After that, though, the average has stayed fairly stable, noted Monique Morrissey, an economist who wrote "The Myth of Early Retirement" last year.
But Morrissey cautions against measuring "retirement" by Social Security take-up rates alone. Forty-five percent of eligible Social Security households continue to earn money from a job or jobs.
It's a fact of life, though, that about one in three people becomes disabled before retirement.
Many boomers, like generations before them, are finding that their intent to continue working is foiled by health, physical or mental.
According to the "MetLife Study of Baby Boomers at 65," published this spring, four in 10 of the 65-year-olds questioned in a random survey who had stopped working sooner than they planned did so because of health reasons.
On balance, surveys tend to find that baby boomers say they feel younger than their calendar age, yet the disability ranks are swelling with those suffering diabetes and other medical problems that make it impossible to continue working. And with health problems, it's harder to find new jobs.
How much should be saved for retirement by the time you're 66? The answer depends on income and lifestyle.
One guideline suggests taking your final working salary and multiplying it by 11. If your salary is $50,000, that recommends you save more than half a million dollars by the time you retire in order to maintain your lifestyle.

Can you retire?
No "best age": It depends on your current cash needs, your health and family longevity, whether you plan to work in retirement, your other income sources and expected future needs, and the lifetime amount you expect from Social Security.
If you live an average lifespan for your age, you'll get about the same lifetime benefits whether you get smaller benefits for a longer period after you take early retirement or you get higher monthly payments over a shorter time if you delay benefits until your official retirement age or later.
Earn while collecting: When you reach your full retirement age, you can work and earn as much as you want and still get your full Society Security monthly payment. If you retire early and earn more than a set limit, some of your benefits will be withheld, but the withheld money will be reflected in higher monthly benefits when you reach full retirement age.
Medicare: Even if you intend to continue working, you should sign up for Medicare three months before you turn 65.
Full benefits: The age to receive full Social Security benefits is 66 for boomers born between 1943 and 1954. After that, it rises by two months for each birth year until it reaches 67 for those born in 1960 or later.
Source: Social Security Administration
Americans at 65
A picture of older baby boomers in 2012:
45: Percentage who are fully retired.
37: Percentage who retired earlier than planned.
36: Percentage who retired when and because they wanted to.
63: Percentage that has started receiving Social Security benefits.
26: Percentage who said they have no concerns about retirement.
58: Average age of those who said they were fully retired.
68.5: Average expected retirement age for those who are still working.
79: Average age they say they'll feel old.
Source: MetLife Mature Market Institute, 2012 study, "Transitioning into Retirement"

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