Risky Retirement Assumptions

Predicting what Baby Boomers actually will do as they age is always a chancy exercise.

A number of surveys have shown that about two-thirds to three-quarters of Baby Boomers expect to work for pay after retiring.  Staying active as we age can promote mental and physical health and the added income can patch any cracks in our nest eggs.

One way to gauge expectations about working in retirement is to look at the experiences of people who have already retired. 

A survey published earlier this year by the Employee Benefit Research Institute in Washington found that just 27% of surveyed retirees had ever worked for pay while in retirement.  A similar study published in September by the Pew Research Center, also in Washington, found that only 12% of current retirees are collecting a salary.

The problem with working after retirement is that you may not be able to work.  Developing health problems may prevent you from finding the kind of work you want or jobs could be in short supply.  In fact, many workers in their 50s and 60s are having a tough time keeping jobs they have today.  A study published this year by McKinsey & Co., a consulting firm, found that 40% of surveyed retirees had to stop working earlier than planned, a consequence primarily of layoffs and poor health.

"There's a big disconnect between what people say they will do, or might do, versus what people are doing," says Cary Funk, senior project director at the Pew Center.

Source: The Wall Street Journal, December 11, 2006