My husband and I met with our financial advisor last week to tweak some of our retirement savings. As an aside, our advisor mentioned it was unlikely that our generation — all three of us are currently in our mid-thirties — will retire at 65. Instead, he believed we will probably work until we’re 70.
Aside from the disappointing idea that we’re still in for another 35 years of working, the prospect of pushing retirement off a few years is not necessarily a negative one. Here are some of the reasons why a later retirement could be beneficial — or a major problem.
It used to be that reaching 65 meant that you had become an old-timer. But now that a 65-year-old could still easily see another 25-30 years of good health, it makes sense to continue working. Not only will it help to stave off the boredom that many able-bodied retirees find themselves fighting after leaving their career at the traditional age, but it also gives you more time to save for retirement while you are (generally) at the top of your pay scale.
In addition to the personal benefits of retiring later, your employer can also reap many rewards by keeping you around for a few more years. It can be very difficult for a company to replace the depth of knowledge and expertise that an older employee has, simply through the benefit of working in the same place for decades.
Finally, there are the societal benefits to having an older retirement age. According to economist Diane Lim Rogers, having retirement moved from 65 to 67 or 70 would significantly lower both Medicare and Social Security spending, meaning that it would be easier for government to balance the budget for those entitlement programs.
Working past 65 is not all a bed of roses, however. For workers who are either not passionate about their work, or who are working in a job that is physically demanding or extremely stressful, the idea of keeping that job for longer is not a pleasant one. In some cases, working past the mid-60s may not even be entirely safe.
Older workers are also making it more difficult for young employees to get their feet in the door. In 2010, senior citizens outnumbered teenagers in the work force for the first time in sixty years, according to Bloomberg News. The lack of opportunities for young workers has negative consequences on all levels, from the personal to the professional to the national.
Finally, there is the sad fact that many individuals are delaying retirement because they cannot afford to do otherwise. There is a national problem with seniors living in poverty or near-poverty conditions. While there is certainly a great deal that this generation and future generations of seniors can offer to the workplace and the country, the overwhelming financial necessity of working past traditional retirement age is not good for anyone.
The Bottom Line
While it is likely that my generation will have to work longer than previous generations, the best thing we can all do is to diligently save for retirement. That will help to make the option of working past 65 a choice, rather than a sentence.
- E*Trade IRA - Official Site