Tag Archives: retirement age

The Early Retirement Paradox

Posted on by
No Gravatar

Seniors are living longer and for some that means that Freedom 55 offers new opportunities. Perhaps it is time to follow a second career. Or given that you are healthy and full of vigor, you may decide to stay on longer at your existing job since the company values your experience, knowledge and skills.

That was a view that was widely discussed. Given that times were tough, delaying the retirement day also meant that increased funds could be amassed to assure a long and enriched retirement when it came. Apparently that scenario is not working out for everyone.

We now read that Early retirement claims increase dramatically according to the LA Times.

Instead of seeing older workers staying on the job longer as the economy has worsened, the Social Security system is reporting a major surge in early retirement claims that could have implications for the financial security of millions of baby boomers.

Since Oct. 1 2008. claims have been running 25% ahead of last year, compared with the 15% increase that had been projected as the post-World War II generation reaches eligibility for early retirement, according to Stephen C. Goss, chief actuary for the Social Security Administration. Many of the additional retirements are probably laid-off workers who are claiming Social Security early, despite reduced benefits, because they are under immediate financial pressure. The numbers upend expectations that older Americans who sustained financial losses in the recession would work longer to rebuild their nest eggs.

The ramifications of this change in trend are profound for the new retirees, their families, the government and other social institutions that may be called upon to help support them. On top of savings ravaged by the stock market decline and the loss of home equity, many retirees now must make do with Social Security benefits reduced by as much as 25% if they retire at age 62 instead of 66.

Society and the economy can function better as people live longer, if seniors decide to continue working or even start off a second career. They can be contributors to the economy rather than needing support.

With Americans living longer, the elderly are increasingly at risk of outlasting their financial assets. That’s a serious problem for them and their families, who are often called upon to provide assistance. The full consequences of retirement decisions made in hard times will become apparent when people who retired early begin to exhaust their savings.

Technorati Tags: , ,

Postponing Retirement

Posted on by
No Gravatar

Yet another headline proclaims what we all know so well.  Reuters reports that Older Americans postpone retirement as economy sags.

With the bleak economic news that is so widely reported, it is not surprising that people try to minimize their risks. 

A December survey by the senior’s advocacy group AARP showed 57 percent of Americans aged 45 or over who lost money in their investments over the past year and who are working or looking for work expect to delay retirement. One in four have already postponed plans to retire, the survey showed.

As the experts report people are losing their assets that they assumed would be there to fund their retirement. 

“This combination of forces creates a triple whammy for older people. The stock market is plunging, jobs are hard to find, and home values are sagging. This creates a really difficult environment in which to contemplate retiring,” said Richard Johnson, an expert in seniors and retirement at the Urban Institute, a Washington think-tank.

Assets in retirement accounts have lost $2.8 trillion, or 32 percent of their value, as of December 2, 2008, compared with September 30, 2007, according to the institute.

Since there is no sign of any early turnaround, one can assume that the proportion of people delaying their retirement will go even higher.  Thankfully more and more are fitter than seniors used to be so they are better able to make this choice.

Footnote: If you are interested in books on Retirement, then why not visit the Retirement section of the Money Bookstore.

Reblog this post [with Zemanta]

Technorati Tags: , , , ,

Never Retire

Posted on by
No Gravatar

Contrary to the previous post on choosing your retirement age, there are some who feel strongly that you should never retire.

Some People Can Be Happy Never Retiring and Nick Midey, who is a lawyer, is just such a person.

“I’ve practiced law for 60 years,” says 82-year-old Nick Midey. “My doctor tells me if an active guy like me stops working they often die within six months, so I never plan to retire.”  Midey’s secret to such personal satisfaction lies in his passion for his job. “I love my work,” he says. “I enjoy meeting and helping people – I never want to give this up.”

Midey noted that four years ago he had heart surgery and was confined to his home for a few months to recover. “I nearly went crazy. I read everything in sight and easily tired of TV. I couldn’t wait to go back to work.” He said it was during this recovery period that he decided he’d never retire.

An even more illustrious example is Sir Alex Ferguson, the manager of Manchester United.

I never think about retiring any more – if my health’s fine I’ll carry on. Ferguson stopped short of indicating he would have to be carried out of Carrington in a box, though he did concede that he might go on managing into his seventies after all.

‘I don’t know what I’m going to do or when I’m going to go, it’s very difficult to say,’ the Manchester United manager, who turns 67 next month, said. ‘My only plan at the moment is not to have a plan. I don’t ever think about retiring any more, I’m not going to put myself into that situation. I’ve stopped thinking, “Should I go this season or next?” You’re not forced to retire now, after all. If your health is all right and your team is doing well there’s no reason not to carry on.

Such individuals who do not wish to retire are presumably in the minority.  However a Vancouver Sun item today suggests that Pension woes could see older workers ‘retire on the job’.

Company pensions funds have fallen so deeply into deficit that the eroded benefits some plans would now provide could prompt older workers to shelve their retirement plans, in some cases also eroding their motivation to the point where they in effect “retire on the job.”  That warning came Thursday in one of two reports on the deterioration in the health of employer pension funds.

Members of defined benefit plans, which promise a set level of benefits at retirement, will be at risk only if the company does not survive long enough to fully fund the plan, according to a report by consulting firm Watson Wyatt Worldwide.

The pensions of workers in defined contribution plans do not have that security.

A pension report by consulting firm Mercer indicated that pension plans may be even deeper in the red, with their assets having fallen to less than 60 per cent of what is needed to fully cover benefits.

“The financial health of Canadian pension plans plummeted in 2008, as stock markets and interest rates declined sharply,” the Mercer report said.  Its index of the ratio of assets to liabilities of a “model” pension plan fell to 59 per cent from 82 per cent last year, a 23-point drop.

Choosing not to retire is a very different situation from having no choice but to continue to work.  It certainly seems that many will be in that unfortunate situation.

Footnote: If you are interested in books on Retirement, then why not visit the Retirement section of the Money Bookstore.

Related articles by Zemanta

.

Reblog this post [with Zemanta]

Technorati Tags: , , ,

Frozen UK State Pensions – Spousal Advice

Posted on by
No Gravatar

Frozen UK State Pensions are never far from my mind, given the severe hardship it creates for many of its recipients.  Naturally when I visited Black Pudding, that incredible cornucopia of UK goodies here in Langley, British Columbia, UK State Pensions did come up in the conversation. 

One surprise to some was the revelation that the spouse of a UK pensioner is entitled to a UK pension on reaching the retirement age.  This is true even if the spouse has never lived in the UK nor paid State Pension contributions.  Given the unfairness of other features of UK State Pensions paid to Canadian residents, it is important not to overlook this useful contribution.  If you are a UK State Pensioner resident in Canada, then I would encourage you to look into this.

Of course there is rarely good news without associated bad news.  The bad news is that the retirement ages are rising as you can see from the following extract from The Pension Service A to Z listing.

State Pension age: The State Pension age is 65 years old for men and 60 years old for women. However, the State Pension age for women is changing – it will rise gradually from age 60 to 65 from 2010 to 2020. The state pension age for both men and women is to increase from 65 to 68 between 2024 and 2046, with each change phased in over two consecutive years in each decade. The first increase, from 65 to 66, will be phased in between April 2024 and April 2026; the second, from 66 to 67, will be phased in between April 2034 and April 2036; and the third, from 67 to 68, between April 2044 and April 2046.

If your spouse is not yet at the UK State Pension retirement age, there is a retirement age calculator provided to determine the age at which the pension will be available.  I guess the bottom line on that is Better Late Than Never.

Technorati Tags: , , ,

Search the Internet for related articles:
Loading