Push off retiring until age 70 and your financial world is going to be much brighter.
The Center for Retirement Research at Boston College reports in a new study titled: “National Retirement Risk Index: How Much Longer Do We Need to Work?” that a whopping 85% of households would be prepared to retire by age 70.
(One caution: These figures are based on Social Security as it is today.)
I want to believe this. And I also believe that most of us will want to keep working even beyond that in our so-called retirement years part-time, or in some fashion, for plenty of good reasons.
Work does not have to be drudgery or a sentence to toil in the salt mines. It’s about staying engaged, alive, purposeful. It’s also a good way to keep a safety net in place… just in case.
For me, born in 1960, working until age 70 is a hop, skip and jump. In fact, the Social Security Administration considers my full retirement age to be 67 anyway. But SSA does dutifully remind me to sign up for Medicare at 65.
FYI, if you’re wondering what the heck the ”The National Retirement Risk Index” is, it measures the share of U.S. households “at risk” of being unable to maintain their pre-retirement standard of living in retirement.
So the central question here is at what age would the vast majority of households be ready to retire?
Here are the key findings of the study:
- Working longer is the key to financial security, but it does not mean working forever.
- Half of today’s households are ready to retire at age 65, but more than 85 percent would be prepared by age 70.
- Thus, five years of additional work would solve the problem for the bulk of the population.
“These results paint a different picture than recent opinion surveys, which find that people anticipate that they will have to work much longer,”
according to the report’s authors.
I recommend reading through this research by Alicia H. Munnell, Anthony Webb, Luke Delorme, and Francesca Golub-Sass for a more detailed analysis. I personally am cheering for this sensible, less alarmist analysis, and I think you will too.
It’s a flip-side view.
By estimating target “replacement rates” (A rate needed to allow households to maintain their pre-retirement standard of living in retirement) and calculating the “age of readiness” (the age at which the household can stop working and maintain its pre-retirement standard of living) the authors estimate that:
- About half (48%) would not have to work beyond 65 to be ready to retire.
- Roughly a quarter (23%) of households would need to work one to three years beyond age 65 to be prepared for retirement
- 17% of households would need to work four to six years beyond age 65;
- 9% of households would need to work seven years or more.
There is a small note, though, that 2.8 % would not be ready even by the time they are 90.
The authors’ conclusion: “Working longer is the key to a secure retirement for most households.”
“Often people respond to such a proposal, however, with “I don’t want to work into my 90s.” Today’s workers should derive comfort from the calculations presented above, which indicate that the vast majority of households – more than 85 percent – would be prepared for retirement by age 70.”
“While this finding suggests that today’s workers will need to work longer than their parents, they are also healthier and better educated, generally have less physically demanding jobs, and can expect to live longer. In short, working longer is feasible for most households, and it does not mean working forever.”
Bravo.
I’m the author of What’s Next? Follow Your Passion and Find Your Dream Job, available here www.kerryhannon.com. I am a MetLife Foundation Journalists in Aging fellow. To learn about great jobs for retirees, check out my column at AARP. My weekly column at PBS’s NextAvenue.org is here. Follow me on Twitter, @KerryHannon
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