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The Changing Face of Retirement in America

The Changing Face of Retirement in America

Nowadays retirement is all over the map. It’s blurred, more elastic. Many people retire piecemeal. Or they retire and then unretire. Or they continue working well after they were supposed to have retired.

As part of a fast-changing retirement picture, many Americans leave their longtime job, but then, fearing that their Social Security benefits and nest egg will prove too small, plunge into part-time work — as a consultant, say, or a salesclerk at a big-box store. Others step down from career jobs but then conclude, after a year or two, that they are bored and want to start their own businesses. So they unretire and become entrepreneurs.

Not long ago, it seems, the typical American’s goal was to retire at 58, 60, 62 — certainly no later than 65. But now, more workers are pushing back retirement to 68, 70, 72 and even later.

Some delay retirement because they are still healthy and love to work. But many put it off instead because their 401(k)’s are so puny, or because their medical bills, even with Medicare, are so high. Or some delay because their stock portfolios haven’t fully recovered from Wall Street’s swoon five years ago, despite new highs set on the stock market last week — nominal records spurred by low-interest-rate policies that have at the same time hurt retirement savings.

Some baby boomers understand all too well why they are called the sandwich generation: they need to continue working far longer than they intended, either because the bill for sending their children to college is so steep or because the cost of keeping a parent in a nursing home is so high — or both.

Another twist is that many more Americans are living into their late 80s and 90s — and many of them are outliving their retirement savings. Some companies are rushing to plug this hole by offering annuities that don’t begin until age 80 or 85. The retirement picture in the United States has become so fluid that one survey found that while 43 percent of Americans say they can’t wait to retire, 41 percent don’t expect to ever retire at all.

While retirement has assumed myriad forms across the country, many economists and other experts on retirement see some common, increasingly worrisome trends. A growing number of workers are convinced they will not have a comfortable retirement. A Boston College study in October found that 53 percent of Americans were “at risk” of being unable to maintain their pre-retirement standard of living once they retire, up from 30 percent in 1989. A study last May by the Employee Benefit Research Institute found that 44 percent may not have enough money to meet their basic needs in retirement.

It is well known that many workers live paycheck to paycheck and find it hard to save much for retirement. A result is that one-third of retirees in the United States rely solely on Social Security, with benefits averaging just over $15,000 a year for an individual and $30,000 for a couple.

A generation ago, most workers with employer-based retirement plans were enrolled in traditional pension plans promising a monthly stipend for life after retirement. Now, just 26 percent of all workers are in such pension plans, including 17 percent of private-sector workers, according to the Bureau of Labor Statistics. Most people whose employers offer retirement plans are enrolled in 401(k)’s instead, and 58 percent of workers are not participating in an employer-based retirement plan, according to the Center for Retirement Research at Boston College.

Retirement experts seem unanimous on one piece of advice: most American workers, whether in their 30s or their 60s, have two choices if they want to assure they have enough to retire on. They must either save more or work more years than they planned, and if they do neither, their retirement future may be bleak indeed.

“The baby boomer generation is the first generation of Americans that will probably do worse than their parents in keeping their standard of living in retirement,” said Teresa Ghilarducci, director of the Schwartz Center for Economic Policy Analysis at the New School.

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