An alarming new study shows that nearly two-thirds of American workers now plan to delay their retirement with many citing the need to recoup losses from the recent recession as a key determinant.
Just two years ago only 42 percent of workers planned on extending their work life but a growing bevy of worries face those turning the retirement corner: the insecurity of retirement plans; the uncertain status of Social Security; frequent barriers to health insurance in old age; and the wavering future value of homes. Thus, Americans are largely predicting a quantum leap into extended work life, according to the Wall Street Journal:
Nearly two-thirds of Americans between the ages of 45 and 60 say they plan to delay retirement, according to a report to be released Friday 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 WSJ article gives the example of 51-year old Matt Stern. Stern is rethinking his retirement plans due to the lasting effects of the great recession:
Matt Stern, 51 years old, a former analyst at a Manhattan hedge fund, met with a financial planner in December, days before he was laid off and the fund announced its imminent liquidation. At the meeting, the planner projected that Mr. Stern could retire at age 62. But now, with his assets down 10% to 20% from their 2008 peak, he is looking for a job and retooling his expectations for retirement.
“I might have to prioritize income over whatever calls to me on other levels,” such as travel or being involved in nonprofit organizations, Mr. Stern said.
As with anything there are pros and cons to this trend. Some companies may enjoy a more experienced workforce and one that is able to train younger generations for longer. But some may also experience higher labor costs (of course WSJ highlights this) because long-time employee wages will be grandfathered in from brighter days. For younger workers it is possible that the upward pipeline will be temporarily blocked. With wages already stagnant future earning potential is plenty unclear for the next generation.
Kevin Cahill, an economist at the Sloan Center on Aging and Work at Boston College, told WSJ, “Keeping older Americans in the work force is a good thing,” he said. “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.”