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Is Work The Future of Retirement?

While working in retirement may sound like an oxymoron, it's increasingly becoming an expectation among America's workers who are realizing they just don't have the money they need to enjoy a traditional retirement. This post summarizes these trends, and then goes on to address an important question: Is working in our retirement years a realistic expectation?

First, as you can see from the graph below, workers have been revising their expectations regarding the age they expect to retire. This graph summarizes information from the Employee Benefit Research Institute's 2010 Retirement Confidence Survey (RCS), and show that the percent of workers who expect to retire after age 65 has steadily increased since 1991, from 11 percent to 33 percent in 2010.

What's more, 24 percent of workers today plan to retire at age 70 or later, and 9 percent say they never plan to retire! (Perhaps they've read my recent post Does Working Longer Increase Your Lifespan?)

In a similar vein, the actual age of retirement reported by retirees has steadily increased, as you can see from the graph below, also put together from information in the Retirement Confidence Survey. In 1991, 19 percent of workers retired at age 65 or later, but that number has increased to 32 percent today.

While more and more older Americans expect to continue working, the important question is, will they be able to find work? In 2010, 41 percent of retirees reported that they left the workforce earlier than planned. Of those, only 5 percent cited positive reasons for retiring earlier than expected, with the remainder citing negative reasons such as health problems (54 percent), downsizing or closure (26 percent), and having to care for a spouse or other family member (19 percent).

The consequences of an unplanned retirement can be significant, the Retirement Confidence Survey reports. "Retirees who retire earlier than planned are more likely than those who retire on time or later to say they are not confident about having enough money for a comfortable retirement or about paying for basic expenses, medical expenses, and long-term care expenses."

And while 70 percent of workers report that they plan to work in retirement, only 23 percent of current retirees report that they actually did work for pay in retirement. Part of the reason for the gap is generational--the current generation of retirees has less financial need to work in retirement and the current generation of workers can expect to live longer. But a large part of this gap also reflects the current state of the economy.

The results from the RCS don't surprise me. In fact, I'm glad that more and more people are on the same page I've been on for some time now. It's long been my belief that current working Americans should plan on retiring later than the current generation of retirees and that they should also plan to work in some manner during their retirement years. Not only will this be necessary to make ends meet, given current levels of savings, but it keeps people engaged with life. Of course, this goal is easier said than done, given the current state of our economy.

My advice? Keep your skills and contacts up-to-date to increase your chances of finding work. And be fanatical about taking care of your health, so you'll be able to work. With those two issues under control, you're more likely to be able to continue working after you "retire."

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