Think you won’t be working in your 60s? Get real

 Think you won’t be working in your 60s? Get real

Try this on for size. Americans say they’re less likely to work into their 60s. That’s according to new data from the New York Federal Reserve.

Seriously, folks.

“The average expected likelihood of working beyond age 62 ticked down to 50.1%, from 51.9% in July 2020, the lowest reading since the start of the series in March 2014,” according to the press release. “The average expected likelihood of working beyond age 67 also declined to 32.4% from 34.1% in July 2020.”

While that isn’t a huge shift. It does reflect something about the future workplace, at least in theory.

And I get it. The time we have spent working remotely and the jarring disruption of our workplaces has made many people ponder their priorities and what really matters to them.

Workers who lost jobs, or took voluntary early retirement packages, may opt to step away from the hassle of trying to battle the ageism and rejection that come from job hunting at this stage in their career. If they were lucky enough to have tax-deferred retirement accounts, the run up in the markets certainly has been a sweetener for the pot and makes that decision much easier.

But that’s not what these statistics are showing. These are younger workers, presumably, who are forecasting. The key words in the Federal Reserve report findings are “expected likelihood.”

Read: How the Covid crisis is making retirement inequality worse

I know from my reporting and discussions with workers of all ages that most want to work for employers who value them, and work-life balance is imperative for those who wrestled with burnout on all front in the past year and a half. There is a yearning for taking more control of one’s working life with flexibility and autonomy.

But retiring and stepping away from paid income in your early 60s seems to me not only foolish on a financial front, but perilous on a personal front in terms of mental engagement and even the emotional gain from being needed and having a network of co-workers that create a social human circle. And there are so many options for work these days. It can be contract or remote, both accelerated by the pandemic.

I had the opportunity to chat about this new report on Wisconsin Public Radio last week with host Rob Ferrett. And boy did we get a lot of call-ins.

The real news is people who we spoke to know in their gut that they will need to keep working. I’m not saying they are wild about that notion, but they aren’t fantasizing.

Elder poverty is a looming crisis

So I am uncertain who responded to this survey in such a pie in the sky manner. They clearly aren’t at the stage where the reality has sunk in about what it takes to finance three more decades of living when you’re not working.

For more than a decade, I have been concerned, speaking and writing about the looming elder poverty crisis in this country. That crisis is emerging as baby boomers retire and are faced with longevity without the savings to finance the years ahead and medical costs, in particular, at the end of life.

Many people believe that Medicare will cover all their healthcare cost in retirement. Think again. That’s a myth.

Read: Avoid the 10%-per-year penalty for not enrolling in Medicare. Know these rules

Experts at Fidelity have estimated that about 15% of the average retiree’s annual expenses will be used for health care-related expenses, including Medicare premiums and out-of-pocket expenses.

Read: How to pay for healthcare costs in retirement

According to the Fidelity Retiree Health Care Cost Estimate, an average retired couple age 65 in 2021 may need approximately $300,000 saved (after tax) to cover healthcare expenses in retirement.

Obviously, that figure comes with caveats because ultimately what you will shell out will depend on when you retire and where you live, your overall health, and that great crystal ball of how long you will actually walk this earth.

And there are more nuances as well when you drill down. The amount you need will depend on which accounts you use to pay for healthcare—a 401(k), a Health Savings Account (HSA), which permits tax-free spending on healthcare in retirement, an IRA, or taxable accounts; your tax rates in retirement and other factors.

That gets me to the real problem I have with these kinds of data dumps that stir up headlines like Bloomberg Wealth’s “Americans Say They’re Now Less Likely to Work Far Into Their 60s.” It’s bold and provocative, but consider that a huge swath of Americans lack access to employer-provided retirement plans like 401(k)s, HSAs or have much of anything socked away for retirement.

“In America, millions of older adults exist on the economic edge,” writes Lisa Glow, CEO of Central Arizona Shelter Services (CASS), the largest and longest serving homeless emergency shelter provider in Arizona, in a MarketWatch opinion column that originally appeared on NextAvenue.org.

The headline:

Related post