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Workers and employers in the U.S. are bracing for a retirement crisis, even as the stock market sits near highs and the economy shows signs of improvement.
New data show that powerful financial and demographic forces are combining to squeeze individuals and companies that are trying to save for the future and make their money last.
Fifty-seven percent of U.S. workers surveyed reported less than $25,000 in total household savings and investments excluding their homes, according to a report to be released Tuesday by the Employee Benefit Research Institute. Only 49% reported having so little money saved in 2008.
The survey also found that 28% of Americans have no confidence they will have enough money to retire comfortably—the highest level in the study's 23-year history.
More people may be spending their “Golden Years” at the office.
A new study from CareerBuilder shows that retirement no longer means the end of one’s career. Sixty percent of workers age 60-plus surveyed said they would look for a new job after retiring from their current company, up from 57 percent last year.
When asked how soon they think they can retire from their current job, more than one-in-ten (12 percent) respondents said they don’t think they’ll ever be able to retire. Other responses included:
1-2 years – 27 percent
3-4 years – 20 percent
5-6 years – 27 percent
7-8 years – 6 percent
9-10 years – 5 percent
More than 10 years – 4 percent
There is good news for mature workers who are putting off retirement.
Employers are looking to hire more seasoned staff, with 48 percent of employers planning to hire workers age 50-plus this year, according to the survey. Forty-four percent said they hired workers age 50-plus in 2012. Seventy-six percent of the employers surveyed would consider an application from an overqualified worker who is 50-plus, with 59 percent of employers saying mature candidates bring a wealth of knowledge to an organization and can mentor others.
“We’re seeing more than three quarters of mature workers putting off retirement, largely due to financial concerns, but also as a personal decision made by people who enjoy their work,” said Brent Rasmussen, President of CareerBuilder North America. “The majority of workers who have talked with their bosses about staying on past retirement found their companies to be open to retaining them. If you’re approaching retirement age but hope to continue working, an open line of communication is very important.”
Mature workers can find job search success by emphasizing the qualities that set them apart from other workers. CareerBuilder offers these tips:
Highlight professional and personal experience – When updating your résumé or interviewing for a job, think about your experience in terms of both work-related and life skills. Whether it’s your strong leadership skills or your wherewithal to weather a tough economy, use your age to your advantage and play up the strengths that come with having more years under your belt.
Stay current – Workers of all ages are going back to school to increase their marketability.Attending seminars and workshops or taking formal courses is a great way to keep your skills up to date and can come in handy during an interview.
Find new ways to benefit the company – If you’re looking to stay with your current company beyond retirement, come up new ways to contribute to the organization outside of your day-to-day tasks. Running mentorship programs or training new hires are examples of how some mature workers have reinvented themselves within their organizations.
Utilize your network – Being in the workforce for an extended time gives you the advantage of a broad professional network. Whether it’s offline or online, reach out to former colleagues, vendors, clients, etc. to see where opportunities may arise.
Consider part-time or freelance work – Fifty-two percent of workers age 60-plus said they will most likely work part-time once retired. Check out job boards, staffing firms and other resources for part-time, freelance or temporary work.
Here are some information places as you begin to build your encore career:
In the current listless economy, every generation has a claim to having been most injured. But the Labor Department’s latest jobs snapshot and other recent data reports present a strong case for crowning Baby Boomers as the greatest victims of the recession and its grim aftermath.
These Americans in their 50s and early 60s — those near retirement age who do not yet have access to Medicare and Social Security — have lost the most earnings power of any age group, with their household incomes 10 percent below what they made when the recovery began three years ago, according to Sentier Research, a data analysis company.
Their retirement savings and home values fell sharply at the worst possible time: just before they needed to cash out. They are supporting both aged parents and unemployed young-adult children, earning them the inauspicious nickname “Generation Squeeze.”
The share of older people applying for Social Security early spiked during the recession as people sought whatever income they could find. The penalty they will pay is permanent, as retirees who take benefits at age 62 will receive 30 percent less in each month’s check for the rest of their lives than they would if they had waited until full retirement age (66 for those born after 1942).
Those not yet eligible for Social Security are increasingly applying for another, comparable kind of income support that often goes to people who expect never to work again: disability benefits. More than one in eight people in their late 50s is now on some form of federal disability insurance program, according to Mark Duggan, chairman of the department of business economics and public policy at the University of Pennsylvania’s Wharton School.
Nearly two-thirds of Americans between the ages of 45 and 60 say they plan to delay retirement, according to a report by the Conference Board. That was a steep jump from just two years earlier, when the group found that 42% of respondents expected to put off retirement.
The increase was driven by the financial losses, layoffs and income stagnation sustained during the last few years of recession and recovery, said Gad Levanon, director of macroeconomic research at the organization and a co-author of the report, which is based on a 2012 survey of 15,000 individuals.
The labor force has been getting older for decades for reasons that range from longer life spans and better health to companies' replacement of defined-benefit pensions with higher-risk 401(k) plans.
But the stark increase in workers expecting to stay on the job—now 62%—was a surprise.
"Keeping older Americans in the work force is a good thing," said Kevin Cahill, an economist at the Sloan Center on Aging and Work at Boston College. "Those workers have more financial security, employers have a larger labor pool to draw from, and we have more people to produce goods and services. There may be bumps like the recent contraction in the labor market, but we need to look beyond the short term."
Studies of 1,500 men and women by the Chicago-based Rush University Medical Center's Alzheimer's Disease Center show that having a purpose in life can help stave off cognitive decline and promote a broadly healthier, longer life.
The following comments are edited excerpts of an interview with Patricia A. Boyle, a neuropsychologist and researcher for the Rush Memory and Aging Project who is also an associate professor at the medical center.
What role does having a purpose in life play as we age?
DR. BOYLE: Our study showed that having purpose in life is robustly protective. Those who reported having purpose in life showed a 30% slower rate of cognitive decline than those who did not. Having purpose reduced the risk of Alzheimer's and its precursor, mild cognitive impairment. Even those whose brains had the plaques and tangles associated with Alzheimer's had better cognitive brain function. It's a remarkable finding.
Why and how does having purpose provide these benefits?
DR. BOYLE: We don't know exactly how, but we think that people who are purposeful are actively pursuing goals, and by virtue of doing this they are enhancing their brains, either bringing in or developing other areas of the brain.
In addition, if you're pursuing goals, you're probably engaging in a whole host of behaviors that we know to be beneficial for health, such as being socially involved and connected to other people and going out and being physically active.
How does this translate into the actual things people do and how they live their lives?
DR. BOYLE:There are so many ways. Philanthropic types of activities, such as volunteering at a food bank, and finding ways of helping others. Maintaining connections with family and friends. One woman who is essentially homebound writes a letter to someone every day, often a note of appreciation. it keeps her social connections active and it gives her something to look forward to.
Many people decide to become mentors. They have a lot of wisdom as a consequence of their having done so much in their lives, and they want to pass along that knowledge to others. Other people want to accomplish new things. They learn a new language or take up a new area of study, even at the age of 80.
Boomer Retirement Life Tips explores their personal strategy and saving for retirement to where they will retire, how to handle aging parents and adult children, to health and wellness tips for aging like fine wine and deciding on a phased retirement or encore career.
One moment you’re 40-ish and moving up, the next you’re 50-plus and suddenly, shockingly, moving out — jobless in a tough economy.
Too young to retire, too old to start over. Or at least that’s the line. Comfortable jobs with comfortable salaries are scarce, after all. Almost overnight, skills honed over a lifetime seem tired, passé. Twenty- and thirty-somethings will gladly do the work you used to do, and probably for less money. Yes, businesses are hiring again, but not nearly fast enough. Many people are so disheartened that they’ve simply stopped looking for work.
For millions of Americans over 50, this isn’t a bad dream — it’s grim reality. The recession and its aftermath have hit older workers especially hard. People 55 to 64 — an age range when many start to dream of kicking back — are having a particularly hard time finding new jobs. For a vast majority of this cohort, being thrown out of work means months of fruitless searching and soul-crushing rejection.
To which many experts say, “What did you expect?”
Everyone, whatever age, needs a Plan B. And maybe a Plan C and a Plan D. Who doesn’t know that loyalty and hard work go only so far these days?
Here are some information places as you begin to build your encore career:
People usually save more as they near retirement, and they’re saving extra now that Americans’ wealth has been depleted by the financial crisis.
From 2007 to 2010, median U.S. household net worth fell by 38.8 percent to $77,300, the lowest level since 1992, the Fed said in June. The savings rate has averaged 4.3 percent in the 39 months since the recession ended, compared with an average of 2.3 percent in the same period before the recession. Retirees and older workers also will likely cut spending as they anticipate tax hikes and cuts in Medicare and Social Security. Six out of every 10 baby boomers between the ages of 50 and 61 say they may have to defer retirement.
Federal Reserve officials say they are concerned that retirees are making it harder for the central bank to create more jobs for those still working. Older people are more likely to avoid purchases of houses, cars, and other pricey items that the Fed is trying to encourage with record-low interest rates. Their growing numbers are making the Fed’s job even harder.
“Spending decisions of the older age cohorts are less likely to be easily stimulated by monetary policy,” said William Dudley, president of the Federal Reserve Bank of New York, in a speech on Oct. 15. Each day, some 10,000 of the 78 million American boomers, born between 1946 and 1964, turn 65. The share of the population that’s made it to that age will swell to 18 percent by 2030 from 13 percent last year, according to the Pew Research Center in Washington.
Growing numbers of older adults are finding a nice surprise in the workplace: a "Welcome" sign.
The number of workers age 55 and up grew by 3.5 million from September 2009 to September 2012. That represents the lion's share of the gain of 4.2 million for all workers 16 and older, according to the Bureau of Labor Statistics. Two factors help explain the trend.
First: demographics. In the three years ended in July, 86% of population growth among people ages 25 to 69 came in the 55 to 69 age range, says Richard Johnson, director of the program on retirement policy at the Urban Institute, a nonprofit research group. That increase comes mostly from the baby boomers, who began turning 55 in 2001.
"There are many more Americans turning 55 in recent years than turning 25," Mr. Johnson says.
Second: changing attitudes. More employers are recognizing that older adults bring skills and experiences to the table that can help the bottom line.
The same is true for other knowledge-worker jobs. For example, "the nuclear-power industry is an industry that is very hard to get people that are fully developed in terms of skill sets and capabilities," Ms. Greaner says. For employers, "it's very difficult to get that expertise."
Aon Hewitt's senior vice president for talent administration Ms. Erin Peterson says talented recruiters can be hard to find. "I find people who have a lot of life experience and professional experience make the best recruiters."
The economic storms of recent years have raised concerns about growing inequality and questions about a core national faith, that even Americans of humble backgrounds have a good chance of getting ahead. Most of the discussion has focused on labor market forces like falling blue-collar wages and lavish Wall Street pay.
Today, only those Americans with valued skills and advanced education's are reaping the rewards of the American Dream. What all Americans really want is more equal opportunity for themselves. One reason behind the surge in wealth at the top is the limited access to education that provides well-paying jobs within the global economy.
This race to well-paying jobs is based on one brutal fact: “The high-wage, medium-skilled job is over,” as Stefanie Sanford, a senior education expert at the Gates Foundation, puts it. The only high-wage jobs, whether in manufacturing or services, will be high-skilled ones, requiring more and better education to produce both more high-skill jobs and more high-skilled workers.
In the Race to the Top in schools, Education Secretary Arne Duncan has built on the good works of his predecessor, Margaret Spellings, and President George W. Bush, who put in place No Child Left Behind. Though never perfect, No Child Left Behind was still a game-changer for education reform because it gave us the data to see not only how individual schools were doing but how the most at-risk students were doing within those schools. Without that, educational reform based on accountability of teachers and principals could never start.
The purpose of Race to the Top, Secretary Duncan explained, was basically to say that if we now live in a world where every good high-wage job requires more skill, we need to get as many of our schools as possible educating their students “to college- and career-ready standards,” measured against the best in the world, because that is whom our kids will be competing against. “We have to educate our way to a better economy,” Duncan argues. “The path to the middle class today runs straight through the classroom.”
If you or your children have been adversely affected in pursuing the American Dream, let your voice be heard in the election box and through this petition.
That's why I created a petition to The United States House of Representatives, The United States Senate, and President Barack Obama.