It’s hard to turn on a cable news program without seeing an ad for retirement planning. Most of those ads stress that we’re living longer, and that most people aren’t putting enough away for retirement. What retirement planning ads tend to ignore are the vast numbers of people who have no chance of ever catching up their retirement savings.
For many closing in on retirement, the bad news doesn’t stop there. During the Great Recession, many of the people laid off were in their 40s and 50s, at the very age they should have been catching up their retirement savings. In a cruel twist, the percentage of the long-term unemployed in their 50s increased from 26.1% in 2007 to 29.2% in 2011. While workers over 50 had the lowest overall unemployment rate at 6.7%, that’s more than double what it was in 2007 — and there is mounting evidence that the jobs older Americans are getting today pay far less than the careers they left.
Nearly 10% of those nearing retirement age see themselves working to age 80, and another 3-in-10 expect to be working into their 70s. More than half of all Americans feel less financially secure than they thought they would at their current age.
Instead of grabbing their fishing rod and heading for the lake, the reality will be grabbing their lunch and heading off to work.
For many that means sideline careers, second careers, and sometimes working jobs that were formerly held by younger workers. Seniors putting off retirement ripples back through the entire workforce, delaying the hiring of new workers and the advancement of those in the middle to more senior positions.
Another reason many Americans delay retirement is debt, specifically mortgage and credit card debt. The share of adults with debt in the 62-to-69 age range increased from 48% in 1998 to 62% in 2010. The disturbing trend of debt later in life means that many Americans have to figure mortgage and debt payments into their retirement calculations. For those with a balance on their mortgage, 65% are still working at age 64, compared to 54% with no mortgage balance.
The shifting attitude toward working later in life, combined with higher debt, means 82% of Americans age 50 and over are planning on doing some work for pay in retirement, according to a study by the University of Chicago.
The numbers are significant for society as a whole, as we collectively struggle with the future of programs like Social Security and Medicare. Many Americans in their 50s and 60s grew up during a time when the combination of a small pension, Social Security, and Medicare would provide a comfortable retirement. It’s a relatively new development, within the lifetime of anyone over 50, that pensions have become a thing of the past, replaced with 401(k) plans subject to the ravages of market crashes and prolonged recessions. An entire generation, who really thought they’d have enough at retirement, are now waking up to a grimmer reality where 1-in-6 have a $1,000 or less set aside for retirement, 1-in-4 have no retirement plan outside Social Security, and the vast majority won’t have enough.
One fact we collectively cannot avoid is that changes to Social Security and Medicare will have very real consequences for millions of seniors approaching retirement. Beyond that are millions more looking at meager balances in their 401(k) plans, and asking themselves how long they can keep working after retirement age. Instead of grabbing their fishing rod and heading for the lake, the reality for the majority will be grabbing their lunch and heading off to work. Americans will be left wondering if even that somewhat depressing view of retirement will be enough — and how long they can keep it going.