Washington, D.C. -- American workers, who face growing financialpressure to stay in the workforce, are far more likely to be forcedinto an early retirement than many expect, according to a recentlyreleased study.Four out of 10 retired workers left their jobs sooner thanthey had planned, usually because of health problems or the loss ofemployment, according to the report by McKinsey and Co., which wasbased on a national survey of 3,086 people.The survey also found that 45 percent of people who arecurrently employed planned to keep working past age 65. But among theretirees polled, only 13 percent said they had done so.The findings raise fresh concerns about Americans' ability toafford a comfortable retirement. With more companies abandoning orfreezing their pensions, many people say they plan to work longer tobuild up their nest eggs.The reality "is quite sobering," said David Hunt, a seniorpartner at McKinsey. "Our research clearly shows that many people --and more than a few public policymakers -- who are betting on simplyworking longer to compensate for a lack of current savings are settingthemselves up for a rude awakening and a significantly poorer standardof living in retirement than they had expected."Ask Rolf Marsh. The computer programmer was 60 when he got asurprise tap on the shoulder from IBM Corporation.
Marsh had planned to work five more years to qualify forhigher pension payments, then retire to enjoy a new phase of life,including visits to friends in Britain and other travels with his wife.
"I guess I was blind to the handwriting on the wall," saidMarsh, who lives near Spokane, Wash. "I didn't think it was going tohappen."
Marsh, 63, has been frustrated in his attempts to prolong hiscareer. "I looked for work when I first got out -- basically, there'svery little up here in Spokane -- and the jobs I applied for I didn'tget. My feeling was it was because of age."
Marsh estimates that his pension is less than half what itwould have been had he remained longer in the job. To boost his income,he signed up for Social Security earlier than planned, further scalingdown his retirement pay.
Eventually, he and his wife took in an elderly boarder whomhis wife cares for to make ends meet. "It's been difficult," he said.
The McKinsey survey included retirees, for which it had a 3.2percent margin of error, and people who are not retired, for which themargin of error was 2.4 percent. It was conducted in March and Aprilamong people 40 to 75 years old.
Among those who retired earlier than they expected, 47 percentcited health reasons and 44 percent pointed to job loss. The remaining9 percent said they had to care for an ailing family member.
Wealth also had a biginfluence in how people'sjobs come to an end. Workers with less than $50,000 in assets were mostlikely to be forced out of their careers due to health problems. Thosewho had more than $1 million pointed to job loss as the greatest reasonfor retiring.For many, there is no way to see a forced retirement coming."They get laid off. They have health issues that prevent themfrom working," said Sandra Timmerman, director of the MetLife MatureMarket Institute in Westport, Conn. "The company merges. A spouse getssick. A parent gets sick. The job becomes more pressured."At the same time, Timmerman noted, workers face the need tomaintain their careers to set aside money for retirement."I think we're seeing the realization on the part of peoplethatthey ought to extend their work life longer than in the past," shesaid.It is a realization brought on by the changing landscape forretirement security. Many employers no longer provide traditionalpensions with guaranteed monthly payments. Instead, they offer 401(k)savings plans, and it's up to the workers to salt away enough money tolast them in old age.Just last week, Fidelity Investments reported that 83 percentof workers felt they were not saving enough for retirement, up from 78percent last year. The mutual fund company also said 31 percent plannedto postpone retirement to keep getting workplace health benefits.
The oldest members of the vast baby boom generation turned 60in January. Members of this generation often cite the need to boosttheir retirement savings as a reason to keep working, McKinsey's Huntnoted."Many of the boomers we interviewed, especially those in theirearly 50s, believe that they will be able to afford retirement bycontinuing to work -- and often put off the sacrifice of saving todaywith this in mind," he added.John Rother, AARP's executive officer for policy and strategy,said the findings underscore the fact that many who expect to stay onthe job will face an uphill battle to keep their careers movingforward."We know that people who lose jobs in their 50s and early 60shave a very difficult time finding new employment," Rother said.For much of the 20th century, the trend was toward earlierretirement as America became more prosperous and the elderly were ableto survive with the help of Social Security. In recent years, however,the retirement age has begun to edge upward, said Joseph F. Quinn, deanof arts and sciences at Boston College, and an expert on retirementtrends.Better health, laws against age discrimination, and aphase-outof penalties in the Social Security program for working past retirementage have all made it possible for people to work longer, he said.The McKinsey figures do not mean that trends toward a laterageof retirement are changing, experts said. But they offer a cautionarynote for those who would discount the challenges of working into theirlate 60s or beyond, and they underscore that many who assume they willwork late into life may be mistaken.Said Rother, "This kind of information is clearly not what theboomers expect."Source: Cincinnati Post.Powered by Yellowbrix.
Source: Money & Work