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The problem with this boomer "retirement plan"

For many retirement-age baby boomers, retirement is getting postponed. Two-thirds of boomers report they want to continue working beyond age 65, according to a recent survey of workers by the Transamerica Center for Retirement Studies (TCRS). And 15 percent of boomers say they don’t plan to retire -- ever.

“Working longer” is certainly an appropriate strategy in this era of extended lifespans and inadequate retirement savings. Unless you’re taking active steps to continue working, however, working longer is more of a hope than a plan.

The big questions: Will older workers be able to keep working, and can they find the work they need? The TCRS study offers reasons for both concern and hope.

One-fourth of boomers expect to keep working as long as possible in their current position until they can’t work anymore. Most likely, at some point, these workers will need to retire for health reasons, or their employer may not allow them to continue working indefinitely.

The evidence backs this up: According to the 2016 Retirement Confidence Survey conducted by the Employee Benefit Research Institute, 46 percent of retirees left the workforce earlier than they had planned. Many said they did so because of a hardship, such as a health problem or disability.

More than one-third of boomers (39 percent) envision a gradual glide out of the workforce: 26 percent want to transition into retirement by reducing their work hours, and 13 percent want to work in a different capacity. This is a more realistic strategy than just continuing to work indefinitely.

But why are people choosing to work longer? Almost two-thirds (63 percent) of the workers who plan to work beyond age 65 cite financial reasons: They can’t afford to retire or haven’t saved enough, they need the health benefits or they want the income. One-third said they want to stay involved or they enjoy their work.

Nearly half (48 percent) anticipate they’ll stay with their current employer when working past age 65, and 53 percent would prefer for that to happen.

But are employers willing to embrace more older workers? The answer depends on whether you see a glass that’s half-full or half-empty. Almost three-fourths of workers (72 percent) said their employer is supportive of employees working past age 65. But when asked about specific policies that would enable continued work, the frequencies were much lower:

  • 20 percent of employers will accommodate flexible work arrangements and schedules
  • 20 percent would enable workers to shift from full-time to part-time
  • 12 percent let employees take positions that are less stressful or demanding
  • 9 percent provide information about “encore” career opportunities

Overall, just under half of workers (48 percent) consider their employer to be “aging friendly” by offering specific opportunities and work arrangements, and by training employees of all ages to be successful.

If working longer is part of your retirement plan, you’ll want to investigate the options at your current employer. If they aren’t very “aging friendly,” politely ask if the employer is open to more flexible and appropriate working conditions. You never know -- enlightened employers may respond to the needs of older and valued employees.

So are workers taking steps to help ensure they can continue working beyond age 65 or in retirement? Once again, the glass may be half-full or half-empty:

  • 60 percent report they’re staying healthy so they can keep working
  • 52 percent report they’re performing well at their current job
  • 42 percent are keeping their job skills up-to-date
  • 19 percent are networking and meeting new people
  • 17 percent are scoping out the job market and available opportunities
  • 12 percent report going back to school and learning new skills

According to Catherine Collinson, president of TCRS and author of that organization’s study, returning to the classroom doesn’t need to mean getting another four-year degree. “You can take a course at a community college, get a certificate at an adult education center or take advantage of on-the-job training,” said Collinson. Any of these possibilities can help you learn new skills or update the ones you have.  

If your “retirement plan” is to work longer, all the items on the above list can serve as a checklist for taking “working longer” beyond a mere hope and into a real plan.

Other steps to help you keep working include:

  • Look for ways to decrease your living expenses, such as cutting your housing or commuting expenses. A day may come when you’re no longer able to earn your current salary, so you’ll want to be prepared to afford your life at that point.
  • Learn how to squeeze the most from your financial resources, so you can afford to assume a lower-paying job, if necessary, or to plan for the day when you’re no longer able to work at all.
  • Have a backup plan in case you aren’t able to continue working. One item of concern: The majority of workers in the TCRS study (60 percent) don’t have a backup plan if they’re unable to continue working.

In reality, the “working longer” plan will take some work to make it happen. Hope is never a good strategy!

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    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.