Working longer may not fix your retirement, economists say
As Americans live longer and worrying their money longer in retirement, an increasing number rely on a single strategy for future financial security: long working.
Approximately 70% of US workers who have not yet retired were considering pushing back retirement dates. A recent survey from F&Gan insurance company. Almost half of the 2,000 adults participating in the survey said they were afraid that they would not have enough money to retire.
Some people went beyond thinking about the strategy. “Two of the 10 workers arranged their retirement age in 2024” A recent report “Most now plans to retire.”
However, experts say that the long -term work plan may not be as reliable as workers hoped.
More than personal financing:
Investors should not try to be a ‘hero’ in this economy: Analyst
Less young adult switch reaches life, money reaches milestones
Social Security signs the 90th anniversary: what could be the advantages
According to 2024, about 58% of the workers retire earlier than they want. research In collaboration with the Transameric Institute from Transameric Pension Research Center. 46% of those who do this did so for health reasons, while 43% stated employment problems and 20% family reasons.
Only 21% said they retired early because they were financially stable.
“The stagnation of 2008 has overturned all these assumptions about the fact that Economic and Policy Analysis Professor Teresa Ghilarducci at the New Social Research School,” 2008 stagnation, to work longer than reality. ” He said. He continued: “We were 50 years old, we were 55 years old, we were really pushed out of the labor market or losing career work and we had to go back and spend their savings in their 50s and 60s due to the difficulty of this stagnation.”
“So you can’t [always] Work longer due to age discrimination and the labor market may not ask for the skills you have acquired for more than 40 years, the labor market and the necessary skills are progressing, “he added.
A system built for a different generation
Experts say that the instinct of retirement is understandable.
Life expectancy in developed countries It has climbed significantly in the last few decadesSt. According to World Bank data analyzed by Louis Federal Reserve Bank. At the same time, the investment burden for retirement was passed to the workers.
In most of the 20th century, the American retirement system relied on what economists called three -legged feces: social security, employer pension and personal savings.
However, one of these legs, social security has an approaching financing that is concerned about what kind of retirement benefits of some workers.
Another leg, pensions, has decreased rapidly for private sector employees. In 1989, 63% of full -time workers According to the Bureau of Statistics, companies with more than 100 employees had a pension. From the beginning of 2023, only about approximate 15% of private sector employees.
Workers are now largely dependent on 401 (K) s and other identified contribution plans, which is based on determining how much these funds will contribute and how to invest.
Some young workers are rising to challenge. Today, younger workers have more money than Boomers in their retirement accounts until the age of 30, Federal Reserve Research.
“Generation Y saves a higher rate than Gen Xers or Boomers at this age,” Christine Mahoney, the leader of the Global Pension Sailor of Mercer, a pension consulting firm. He said. “That’s why I guess if they’re tense and saves them, I can say, that’s not a bad thing.”
However, personal savings may not be enough. Unexpected medical invoices, market decreases or job losses can rapidly remove disciplined protectors by rapidly leading to what experts call 401 (K) “leakage”. Add the increasing weight of the student loan debt and it becomes even more difficult for retirement to meet for some workers.
Does the solution work longer?
Some policy makers and economists say that expanded careers can help Americans close their retirement gaps.
“Today, we have more options for longer business life, and Americans benefit from them,” Andrew Biggs, a senior man of the American Enterprise Institute, “today.” He said.
Number of Americans employed 65 years and older According to the CNBC analysis of BLS data, 33.2% grew between 2015 and 2024.
Biggs also stressed that elderly workers continue to bring value to the labor force. “There is a great demand for elderly workers,” he said. He continued: “They still have a lot of skills, so much to be given, and that’s why they can be valuable for employers.”
However, others say that the perspective is not compatible with how the labor market actually works.
“Labor Market does not always want you when you want the labor market,” Ghilarducci said. “Employers have the biggest role in the decision about whether you are working and what the quality of your business is.”
Watch video To learn more about why Americans can work longer than their parents above and whether planning to work longer really helps retirement.
