Average Retirement Age is Rising
People have different views about retirement age. Does your view hold that you should work beyond the typical retirement age, or even fail to retire at all?
Whatever the view you may have, one thing is for sure: a significant working population of the Americans would wish to delay retirement beyond the traditional retirement age because of various factors.
While some people work in their old age for fun, others desire to extend their working years because of other factors, including financial obligations.
As they near their retirement, they realize that they have fallen short of their goals, and hence the need for financial adjustments.
This article explores various factors behind the rising retirement age among the Americans for the last thirty or so years.
Average Retirement Age is on the Rise
The average retirement age is 62, but that seems to be increasing every year.
Education keeps evolving every time. This could be due to factors such as improvement in technology and improved research methods that lead to new discoveries.
They say necessity is the mother of invention, and so, the need for innovative ideas to cope with the dynamic nature of life could also be a factor.
As a result of these factors, the level of education among the Americans has been on the increase over time. In the last thirty years, for instance, there has been a significant rise in the level of education.
The people with increased levels of education work more because they have a lot to contribute to the labor sector. Many seniors are becoming entrepreneurs are starting their own business.
The new plan removes the built-in incentives from the previous one, discouraging workers from early retirement.
This plan was championed by the renowned economist and Nobel Prize winner Richard Thaler.
According to recent statistics, most workers under the new plan delay their retirement by one or two years.
Improved Life Expectancy
For the last couple of decades, the life expectancy of the Americans has increased. The increase can be attributed to various factors, including improved technology in the medical sector and improved health insurance coverage.
These factors contribute to good health, which is essential for long service in the labor sector.
The Need to Retain Employer’s Health Coverage
Health care costs have increased significantly over the years. In fact, a significant percentage of people’s income goes to medical expenses.
Because being employed guarantees workers employer’s health coverage, most people prolong their employment until they qualify for Medicare.
Medicare requires its beneficiaries to attain age 65, which is why many Americans stretch their working years to this age.
Changes in Social Security
The evolution of social security has made delayed retirement more admirable than early retirement. The earnings test has been liberalized to encourage people to extend their working years.
Typically, the retirement credit is delayed up to age 70, despite workers attaining the full retirement age. Because most people want to start getting their retirement benefits immediately after retirement, they choose to work for a few more years.
Over the years, the United States has witnessed a gradual shift from physical jobs to knowledge-based jobs. These knowledge-based jobs are worker-friendly because they require less energy, meaning that people can still do them effectively and efficiently in their old age.
In families where both spouses work, one spouse may want to delay retirement so the couple can begin getting their retirement benefits simultaneously for proper coordination of their family matters.
Because wives are a few years younger than their husbands in most cases, the latter may want to delay their retirement.
For instance, if a man qualifies for a social security fund one year ahead of his wife, he may want to prolong his stay in employment so that they begin benefiting from the social security at the same time.
Lack of Proper Planning
Lack of sufficient planning and saving could be the reason for delayed retirement. Some people reach their retirement age only to realize that they have not saved enough to take care of themselves in their post-retirement years.
As a result, they resort to staying in employment a little longer in the hope that they may add something to the little saving they have. In fact, some look for other less demanding jobs after retirement to supplement their income after retirement.
In a nutshell, in as much as there are many factors contributing to the rising retirement age, the need to stay a normal life, where you can be able to meet all your financial obligations, constitutes one of the major causes of the rise.
The cost of living is rising each day, hence the need for adjustment. Because the retirees may have limited options to address financial and other problems after retirement, planning in advance is crucial.