Wednesday, May 30, 2007

More Workers Delaying Retirement

After falling for more than 100 years, the retirement age chosen by working Americans is edging up once again, and the trend could have broad consequences for households and the economy according to this article from the Los Angeles Times.

In the mid-1980s, just 18% of people in their late 60s still had jobs, the Bureau of Labor Statistics said. That figure is now up to 29%, and experts believe the level will continue to rise as people confront the prospect of a lengthy and expensive old age with limited retirement benefits. More than 1 in 4 baby boomers — the huge generation born from 1946 to 1964 — plan never to retire, a recent survey by the National Assn. of Realtors shows.

Many will not achieve that goal. Health problems and workplace pressures such as cutbacks force many workers into retirement earlier than they expect. And employers that have a choice often prefer the young, viewing older workers as costly and resistant to new technologies.

Despite that, older Americans are pulling paychecks, a shift that is increasingly noticeable among people in their late 60s.

Ten years ago, the typical age of retirement for all U.S. workers was 60, according to the Employee Benefit Research Institute. Recently, it has risen to 62 overall, a shift that researchers believe may be partly tied to the increasing reliance on 401(k) plans and the decline of traditional pensions that guaranteed monthly payments for life.

The trend could potentially have a big effect on society, putting more money in the pockets of the elderly and even giving the economy a boost, as more workers continue paying income taxes in their golden years. Research by analysts at the Urban Institute suggests that if all workers added one year to their careers, it could markedly reduce the projected shortfall in Social Security.