Two thirds of Americans polled by the US Conference Board said they plan to keep working beyond retirement age. Two years ago, the same poll said only 42% planned to delay retirement significantly.
Losses in the financial markets, layoffs, and income stagnation are keeping people at work. This is yet another indication that traditional retirement planning may not fill the bill.
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Markets may have recovered most of their losses but that doesn’t mean that investors have recovered theirs. Many are still 10% to 20% below their 2008 levels.
Add in the time value of money and the loss is practically impossible to make up. Even with the housing market and other areas of the economy showing strength, the low interest rate environment means it will be difficult to generate sufficient retirement income.
The uncertainty surrounding Social Security also means it may be harder to get employer health insurance after retirement.
Utilities and power companies will benefit since they typically have difficulty filling retiree spots due to the shortage in skilled workers.
But older workers staying on longer may also block the pipeline for younger workers entering the workforce.
Intentions are not always followed through, however, and more workers may retire on schedule than planned. Either way, retirees are likely to have different needs for their retirement than the 4% rule and traditional asset allocation will accommodate.
The weeks up to the March 1 and March 27 Congressional budget deadlines are an excellent time to review your clients’ retirement objectives and to talk about possible options
, or even come up with a Plan B.