Retirement? Boomers aren't ready yet

This generation isn't just staying in the workforce — some who left are coming back.

  • By Alessandra Malito,
  • MarketWatch
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Retirement isn’t for everybody — or at least not every baby boomer.

The generation closest to retirement isn’t ready to leave the workforce, according to an Express Employment Professional poll of 1,500 U.S. workers between 54 and 72 years old, conducted by Harris Poll. Some have decided to extend their careers, others are dipping their toes into retirement by shifting to part-time work and then there are the retirees who decided they wanted to come back to work after all.

A majority of employed boomers, the generation born between 1946 and 1964, say they’re financially prepared for retirement (about 27% of them say they’re “very” prepared), according to the poll. Almost half had an age in mind for retirement — 66, on average — but for a third of participants, that age was delayed (and only 9% made it earlier). The desire to extend their careers might have to do with how these boomers feel when they are in the office: half or more of those who were still in the workforce said it made them feel knowledgeable, confident and valued.

But not all near-retirees are working longer because they want to keep busy. The participants who said they would never be able to retire said they felt frustrated, overwhelmed and old. Many elderly workers need to keep a job to pay for their living expenses, as well as help their elderly parents or young adult children. They also need to fund their own health care expenses in the future. Medical expenses rise every year, and even more so for the elderly. A 65-year-old couple who retired in 2018 could expect to spend $280,000 for health care in retirement, which does not include long-term care costs.

Many Americans are not financially prepared for retirement. Almost half — 46% — of Americans don’t expect to live comfortably in retirement, according to a Gallup poll from May 2018, a much higher figure than it was when Gallup first began tracking the sentiment of retirement preparedness in 2002 to 2004 (it was 32 to 36% then). Previous studies have suggested Americans have as little as $5,000 saved for retirement, and one in five have no savings at all, according to a 2018 Planning & Progress Study by Northwestern Mutual. Of the baby boomers surveyed, a third had between $0 and $25,000.

But delaying retirement, when possible, is a smart move for near-retirees, even if they do have a nest egg waiting for them. Postponing retirement for six months alone can equate to saving an additional 1% over 30 years, according to researchers at Stanford University, George Mason University, Cornerstone Research and Financial Engines, assuming that’s an option.

Postponing retirement isn’t all about money. Americans are living longer — and are healthier for longer — which keeps them in the workforce. There are also policy incentives for employees who work later into life, according to a study by Matthew Rutledge, a Boston University economics professor: the shift from pensions to 401(k) plans have incentivized employees to keep stashing away parts of their paychecks for their futures, and Social Security policy has workers holding out until full retirement age, or later, so they get the full amount of their benefit check, or more.

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