Monday, January 21, 2008

Later Retirement, Better Retirement?

USA Today's article on Boomers who retire early, posits that half of the Boomers will take retirement at age 62 and three quarters will have taken it prior to age 66.

Grace will NOT be among that number.

Financially, I cannot afford to leave my employment at age 62, so what would be the point? More importantly,I'm not willing to suffer the effects of Social Security's "earnings test" which cuts benefits for those who who apply for Social Security but continute to work by $1 for each $2 they earn over an annual limit. In 2008, that limit is $13,560. OUCH!

But there's also the fact that work structures my life. As I said in an earlier post, I love what I do. I can imagine slowing down. I can imagine working part time. But I cannot yet imagine not working at all. That's a good thing, because my personal financial calculations show me that I will need to work to at least age 69.

I have always thought that taking Social Security benefits at age 62 was the equivalent of betting that I would not live past 77. There are things in my medical history and that of my parents that give me pause. My father died of a stroke at age 68. My mother did not survive a heart attack at age 78. These are NOT good statistics. Nor is the fact that they both had Type II Diabetes and so do I. On the other hand, I treat my medical conditions aggressively and I am in better health at age 58 than either of them were at the same age.

The USA Today article disputes that age 77 is the break-even juncture, pointing out that retiring early may cost more than the simple calculation upon which my assumptions are based.

Which brings me to my question. Leaving aside those people who must retire due to health issues, why are boomers so eager to leave the work force? Do they really have a plan for their retirement? Have they figured it out financially, or do they just think it's the next logical step?

When I was in my thirties, 62 seemed ancient. Come to think of it, mine is the generation that coined "Never trust anyone over 30!" The years beyond that were some sort of emotional wilderness. Now that I'm barely three years away from the earliest retirement date, I still have trouble taking it seriously. Certainly, I'm not willing to run up to it nor to "take advantage" of it. For me at least, later is definitely better.


DogAteMyFinances said...

Just this weekend, a friend's mom was telling me her Social Security calculations, and was proud of that! She needs that money to retire.

I don't mean this to sound harsh, I just don't understand. When boomers were growing up, was Social Security really expected to last in a way that you could depend on it for most of your retirement? I don't think I know any young people who think that way (if they think about retirement at all, I suppose.)

Anonymous said...

My mom worked almost her entire life for the same company. They forced her into early "retirement" when they restructured company. She was 62. At first she seemed delighted, then slowly seemed "lost" and without purpose. She died at 63 even though she had been in fantastic health her entire life.
My Dad worked until he was 72 and stayed young and vibrant and active and happy. He then retired by his own choice, and just two short years later he is riddled with health problems and seems bored and without purpose. Money is not a problem. He just seems to lack purpose and structure.
Neither one of my parents loved or even "liked" their jobs. It turns out though it was the best fountain of youth there is.

Bouncing Back said...

I agree with you, I may end up not working full time when I get older, but I like to work and will probably work part time later in life. I like the structure of having a job and a purpose.

Living Almost Large said...

Because they get forced out of their jobs. My mom left at 55, but I know it's really because she had been restructed about 2-3 year before from her power position down.

And she's been slowly adjusting for 8 months now to retirement at 56. What will she do? I hope soon she starts working again somewhere else.

She needed a change, now if only she can see it. It's a huge opportunity, I am reading "what color is my parachute for retirement". If it's as good as I hope, I'm sending it to her. Let's see how it goes.

I'm Grace. said...

Let me know if you find the Bolles book worth buying. My library doesn't carry it.

Bob McD said...

It's not just you Grace. You're just smart enough to have figured it out. Meanwhile, over half of our contemporaries take the money at 62, and I'm guessing that at least half of them shouldn't.

By the way, one more factor that everybody seems to forget is that when you retire at 62, you have to fend for yourself re medical insurance until medicare kicks in three years later.

Living Almost Large said...

Unless you were in a position like my mom to get free medical for her and my dad for life and a pension for life. Nowdays the state doesn't offer that so she really was one of the dinosaurs.