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Boomer Solution to Retirement Shortfall: Work Longer

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Finally—an answer to a problem plaguing baby boomers, their advisors and the country as a whole; how do they ensure an affordable quality of life in retirement? Work longer.

While the answer might seem facetious, more boomers are taking that route.

The Insured Retirement Institute (IRI) released new research on Wednesday that finds an increasing number expect to continue working into their retirement years, although IRI concludes it may not be as feasible as they believe.

While almost two-thirds of Boomers are counting on employment during their retirement years as a source of income, several studies have found that half of workers exit the workforce prematurely.

“About half of retirees leave the workforce earlier than they planned because of, among other issues, health concerns or a lack of employment opportunities,” IRI President and CEO Cathy Weatherford said in a statement. “As we live longer, it’s becoming more commonplace to accept the idea that we have to work a few extra years and rightfully so. But Boomers must reevaluate their plans and develop contingencies in case they cannot work as long as they intend. This evaluation requires identifying alternative sources of lifetime income.”

According to IRI data, 35% of boomers are planning to work into their late 60s and beyond—with 12% of boomers planning to work into their late 60s and another 23% planning to work to age 70 or older. Yet labor force participation rates in 2010 reveal that only 17.9% of those aged 65 and older were still in the workforce, according to the Bureau of Labor Statistics.

Other key findings include:

  • IRI research found about one-third of Baby Boomers (34.9%) and one-quarter of Generation Xers (25.1%) reported they are planning to retire at age 66 or older. Yet a significant percentage of individuals in both generations (30.8% for Baby Boomers and 26.7% for Generation Xers) state they did not know at what age they would retire.
  • In 2012, 50% of surveyed retirees report they retired earlier than planned. The most cited reasons are, 51% due to health issue or disability, 21% due to changes at their employer or downsizing, and 19% due to family care giving responsibilities.
  • Working a few extra years beyond full retirement age can have a significant positive impact on retirement readiness. According to one study, 66% of individuals are ready for retirement at age 66. If those individuals waited until age 70 to retire, their retirement readiness increases to 89%.
  • Among workers age 50 and older, 38% expressed an interest in a phased retirement program. Of those interested, 78% stated such a plan would encourage them to work past their expected retirement age.
  • IRI research found 64.4% of Baby Boomers and 70.0% of Generation Xers stated that work in retirement will be a source of retirement income.
  • According to a study, 75% of retirees stated the method in which they retired was to stop work all at once. This implies that those retirees who wish to work in retirement may experience a period without work as they search for employment. The current economic situation will pose serious challenges for seniors who wish to find work in retirement.
  • For retirees who wish to work, the monthly income from an annuity will provide the continued income to help manage the challenges of the labor market.
  • Due to increasing instances of disability as individuals age, a deferred annuity can provide an accumulation vehicle and a source of income for later ages when an individual may not be able to work. 


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