Retirement has always been an evolving concept. Up until just a generation ago, the most common retirement expectation was that everyone would be able to stop working at age 60 or 65 and live off a pension they earned from working 30 or more years with a single employer. Those who didn’t have a pension would live off their Social Security income.
But to some people in the current generation, the idea of retirement may not be seem relevant anymore. For a number of reasons, the current generation may view retirement as something that makes sense, either from a personal or a financial perspective, but may be very difficult to achieve.
Here are five of the most common reasons why.
Inadequate Savings. One of the most common reasons that the current generation may never retire is that they haven’t saved enough. Unfortunately, approximately 30% of all workers have zero retirement savings, and 40% of all workers are not doing any current saving for retirement. If you’re not confident that your retirement nest egg is going to last you for the rest of your life, you may be reluctant to voluntarily leave the workforce.
Changes to Social Security. The Social Security Insurance program has undergone a number of changes throughout its existence. But many people believe that the biggest changes are yet to come, and that the next few decades are likely to see a significant reworking of how benefits are calculated, how much the benefits are worth, and who is eligible to receive them. Even if the changes to the program ultimately aren’t particularly significant, the uncertainty regarding what the program will look like in a decade or two may lead many people to decide that they’d rather keep working than hope that rely on Social Security will adequately fund their long term retirement expenses.
Longer Life Expectancies. But it’s not just bad news that’s contributing to the possibility that the current generation may never retire. People are also living longer. So if your current retirement savings now needs to last for 30 or 40 years instead of 10 or 20, you might realize you don’t have enough saved, and continue working.
Health Care Costs. The largest single category of expense for most retirees is their ongoing health care costs. Since we’re living longer lives, we have to pay medical expenses for a greater number of years. Even if an individual is in relatively good health, they can expect to pay a lot each month just for basic health insurance coverage. Some individuals continue working, and avoid retirement altogether, in order to participate in a more affordable employer-sponsored health insurance plan.
Choice. Finally, don’t underestimate the shifting notions of what type of lifestyle people actually desire when they’re older. Some people nearing the traditional retirement age have watched their parents go through retirement without working. Without the structure and challenge of a job – even if it’s just on a part-time basis – some individuals experience a lower quality of life. So some people decide to keep working.
Fortunately, the decision whether or not to retire remains largely within our own control. If you desire a traditional retirement, but aren’t currently on track to make it happen, take the necessary steps to make a change.
Tags: retirement advice, retirement planning, retirement savings, social security
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on Tuesday, January 8th, 2013 at 4:04 pm and is filed under Planning.
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Retirement has always been an evolving concept. Up until just a generation ago, the most common retirement expectation was that everyone would be able to stop working at age 60 or 65 and live off a pension they earned from working 30 or more years with a single employer. Those who didn’t have a pension would live off their Social Security income.
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