If you have employees who are nearing retirement age, don’t be surprised if they indicate an interest in working several more years. New studies and surveys are showing that the American dream of retirement is being delayed:
• According to Gallup’s 2016 Economy and Personal Finance Poll, workers in 1995 expected to retire at age 60. Two decades later, the expected retirement date is 67.
• Some workers have given up on the idea of retirement. A 2015 Federal Reserve study found that 27 percent of Americans said they will keep working as long as possible, and 12 percent don’t plan to retire at all.
Reasons for the Delay
There is no one reason why workers delay retirement, but most experts agree that the biggest reason is retirees haven’t saved enough money.
In the past, companies offered pensions, which were a major income source for many retirees. When the trend shifted to 401(k) plans, many Americans failed to contribute enough. According to TransAmerica, most Americans save about $63,000 for retirement, even though they think they’ll need $1 million to live comfortably. Another problem is that many retirees are not sure how to handle their 401(k) assets and are uncomfortable with the ups and downs of the market.
Those who did save diligently may have lost their savings during the recent financial downturn or the tech bust that preceded it. Some baby boomers are hoping to make up the shortfall by relying heavily on Social Security. However, Social Security is only meant to replace about 40% of the average person’s pre-retirement income. Currently, the average Social Security check is only a little more than $16,000 per year, an amount that’s difficult for most people to survive on.
While many seniors plan to work past the typical retirement age, some may face work cultures that are not “aging friendly.” Other seniors may find that they lose their desire to work or are not healthy enough to continue as long as they hoped.
The good news for employers is that they have a skilled workforce.
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