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Americans Are Delaying Retirement And Here’s Why

23 August 2018 No Comment

An increasing number of people are putting their retirement plans on hold in favor of working a few years longer. According to the Economist, 40 percent of men aged 65-69 are working compared to 25 percent four decades ago. In their 20s and 30s when most are starting to ponder whether to start saving for retirement, there is now no sight of retirement at 65 with a record number of people continuing their jobs, freelancing or changing fields altogether. In a survey by Willis Tower Watson, 37 percent of participants expected to be working past the age of 70.

So what is driving the rise in older aged workforce? For one, most Americans are worried about their retirement plans and having sufficient savings to retire. With increased levels of debt across households in America, chances are that most retirement aged Americans are still paying off student loans, credit card debts and mortgages hence the need to work longer. Check out some of the reasons why people are choosing to work longer and retire later in life.

Pursuing Better Health

Life expectancy among Americans continues to increase. With more people living well beyond retirement age and in better health as they were before 50 years ago, they are able to carry on working beyond the age of 65. In a study published in the Journal of Epidemiology and Community Health, it was revealed that working one additional year beyond retirement age was linked to a 9-11 percent decline in the risk of dying. Since then, there has been multiple other studies released supporting the health benefits that working later in life can bring about, including the continued cognitive and mental stimulation.

Increasing Income (And Retirement) Options

Working longer can positively impact your finances. It can help to build a larger nest egg for when you do retire and can also help you to avoid using your savings until you absolutely have to. In Northwestern Mutual’s Planning & Progress Study, 78 percent of Americans were extremely or somewhat concerned about not having enough money for retirement. According to GoBankingRates, the annual cost of retirement can range from just shy of $38,000 to $71,000 in different states. In 2016, the U.S Bureau of Statistics data indicated that older households spent an average of $45, 456 per year. With current life expectancy at 79 years old, this means that Americans are looking for at least $636, 384 to retire. This reinforces the need to begin financial planning much earlier in life.

More seniors are facing financial stress over the repayment of loans, mortgages and whether they can afford to remain in their homes after retiring and losing that regular income. Working an additional few years can make the difference between paying off their mortgages or the rest of their household debt. Americans aged 55-64 years old (their peak years before retiring) owed approximately $108,300 while those aged 65-74 years old held $66,000 in debt. With rising home prices and a growing mismatch between incomes and cost of living, more Americans are getting on the property ladder later in life. They are also turning to credit and student loans to finance their education from as young as 18 years old. As a result, they end up working beyond the preset retirement age as they simply work to support their lifestyle or repay debt.

Maximizing Retirement Benefits

By working beyond retirement, you benefits including social security continue to increase. Researchers at Stanford estimate the Social Security benefits accounts for upto two thirds of a retiree’s income.   The full retirement age for Social Security in the United States Of America is now at age 66 years old. However for each year until aged 70 that you delay, social security is increased by approximately 8 percent. This means a bigger benefit when the time to retire does eventually come. In the meanwhile, a monthly paycheck cover the costs of living. In addition, employer contributions to your 401 k plan and workplace covered healthcare can sometimes work out better than state provided Medicare.

These reasons along with a host of others are influencing the shift in the workplace in America and across the globe. Whether out of necessity or by choice, gone are the days that workers are filing their Social Security claims and preparing for retirement by age 62. Now, more of them are continuing their careers into their older years or in some cases, starting over in a new field.

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