Baby boomers find retirement age now a moving target
By Diane Stafford
KANSAS CITY, Mo. — Just how much the Great Recession reshaped what many baby boomers thought retirement would look like is becoming clearer: More than ever, they now expect to retire later or work when they're "retired."
In 1991, just one in 10 workers told the Employee Benefit Research Institute that they planned to wait to retire until they were older than 65. By 2007, three in 10 said that.
This year? More than four in 10.
Boomers cruising toward a traditional retirement suffered a financial comeuppance in the prolonged economic slump that began in late 2007. The downturn sapped jobs, stock and housing values, and interest on savings.
Many were also caught in the shift from defined-benefit pension plans to 401(k) plans that required workers to contribute toward their own retirement savings. Some didn't, a choice that will leave them short financially.
Small wonder that, according to the Pew Research Center, boomers are the gloomiest of all age groups about the health and future of their finances. Boomers were more likely than other age groups to tell Pew researchers that they lost money on investments since the recession hit. Nearly six in 10 said their household finances worsened.
Finally, employment-based health insurance for many retirees has been withering away, which is causing older workers to cling to paychecks.
Overall, the stage is set for a new normal: working in retirement.
That suits William Brockman just fine. The 65-year-old working retiree began a job this year at a child-care center in Overland Park, Kan., where he delightedly calls himself "a shepherd to flocks of children" four days a week.
Brockman worked for the federal government for 33 years, leaving at age 59. But he soon found he needed to better his financial situation and have more contact with people.
"I truly believe the more active one stays, both mentally and physically, the better the quality of life," Brockman said.
So his first post-retirement job was as a grocery store courtesy clerk. When that ended, he jumped at the day-care center opportunity "in order to have more income, and I found that in retirement every day is Saturday, so to speak. Now my days are special."
The number of older workers has grown more rapidly than any other age group in the last few years. This year, 18.6 percent of those 65 and older were participating in the labor force, compared with 13 percent in 2002.
At the same time, older workers represent a disproportionately large share — 40 percent — of people who have been trying to get back into the workforce for at least a year.
The scramble for re-employment is made more desperate for some who fight age discrimination and outdated skills.
"The prospects are dim for older workers who lose their jobs," said Christine Owens, executive director of the National Employment Law Project. "They have the highest rates of long-term unemployment of any age group."
The unemployment rate of 55-and-older workers jumped from 3 percent at the end of 2007 to 7.4 percent in 2010 and settled at 6 percent earlier this year.
Among the 65-and-older group, the jobless rate, which for years was 3 percent to 4 percent, pushed above 7 percent in 2010 before edging down to 6.5 percent this year.
Demographers warned for years about social and economic stress when baby boomers began "retiring in droves." After all, boomers — representing slightly more than one-fourth of the U.S. population — are hitting age 65 at the rate of 10,000 a day. One in every four 65-year-olds today will live past age 90, and one in 10 will live past 95.
That's a long time to be retired. And it's guaranteed to stress the Social Security and Medicare systems. Younger age groups, needed to keep paying into the system, aren't as big as the boomer group that will draw benefits in ever-greater numbers.
As the nation's largest generation noses toward Medicare eligibility at age 65 and full Social Security benefits at 66, about two-thirds of the boomers are continuing a longstanding American trend of "early" retirement before they reach those landmarks.
The Employee Benefit Research Institute finds that today's near-retirees are more likely than ever before to expect to continue working for pay beyond their "official" retirement.
Those expectations are a stark contrast to the actual work experience of already-retired Americans. While about seven in 10 current workers say they expect to work for pay in retirement, only about two in 10 current retirees have actually drawn paychecks since they retired.
Bill Smith, 62, of Kansas City considers himself both retired and working. He took an early retirement offer from Teva Pharmaceuticals. Then he promptly returned to the same company in a three-day-a-week contract position that has more flexibility.
It's a fact of life, though, that about one in three people becomes disabled before retirement.
Social Security remains most boomers' hope for retirement income. On average, U.S. workers are beginning to take Social Security benefits at age 63.8. That average fell by more than five years between 1945 and 1970. After that, though, the average has stayed fairly stable, noted Monique Morrissey, an economist who wrote "The Myth of Early Retirement" last year.
Americans at 65
A picture of older baby boomers in 2012:
45% Fully retired
37% Retired earlier than planned
36% Retired when and because they wanted to
63% Started receiving Social Security benefits
68.5 Average expected retirement age
79 Average age when they say they'll feel old
Source: MetLife Mature Market Institute
Reprinted with permission.