To Retire or Not: That is the Question

Peter A. ScilovatiSeptember 15, 2017

Retirement Planning

At Hoover Financial Advisors we counsel many clients daily on “Retirement Readiness” issues.  One of our goals is to help clients create a roadmap or blueprint for their retirement years.  But, to borrow from the title of the ancient Rome based play “A Funny Thing Happened on the Way to the Forum” we have found that “A Funny Thing Happened on the Way to Retirement”!

We’re finding that many more clients than ever before are saying “No” to retirement and working into their 60s and beyond. It’s the “new” old age. A 2016 New York Times article reports nearly a third of adults aged 65 to 69 years of age are remaining in the workforce and a fifth of 70- to 74-year old men and women are still working. About two-thirds of these individuals have full-time jobs, defined by the Bureau of Labor Statistics as working at least 35 hours weekly. This changing labor pattern is partly due to Americans’ expanding life expectancy. There are more centenarians now than ever – the Centers for Disease Control and Prevention report there are 72,197 Americans aged 100 years old and older, an increase of 44 percent since 2000.

As the typical lifespan increases, so do the chances of outliving one’s money. As a result, retirees – particularly those in good health – are staying in the workforce to offset their longevity risk. However, even those reluctant to continue working may elect to stay in their jobs longer once they see the significant financial, physical, and mental benefits attributed to working.

Working longer increases the likelihood of a financially stable retirement

Working longer helps clients compensate for shortfalls in savings or poorly performing investments that cannot provide the support their household needs in retirement. In an article in Investment News, Jamie Hopkins and David Littell, faculty members of The American College of Financial Services, discuss how preparedness for retirement increases from 49 percent with a retirement age of 65 to 85 percent with a retirement age of 70. For those whose work is no longer satisfying, spending discretionary income on enjoyable activities outside the workplace can provide relief from stress while still allowing clients to gain the benefits of working longer.

Social Security benefits increase when claims are deferred

Individuals who claim Social Security benefits at age 62 receive substantially lower monthly payments than those who draw benefits later. Deferring Social Security benefits until the age of 70 may be possible when there’s a paycheck to cover living expenses. Claiming Social Security at 70 qualifies recipients for about 50 percent to 57 percent more income than claiming Social Security at the age of 62.

Investments and savings have more time to grow

Working longer allows people more time to contribute to their savings, which is especially valuable for our clients whose employers make matching contributions to their 401(k) accounts. Often, pre-retirees can accelerate their savings rates, once college tuition bills or home improvement projects are paid off. A few additional years of work means more time to accumulate “free” money from employer contributions to retirement accounts. The higher savings rate that is possible at this stage can very effectively set clients up for a better quality of life in retirement.

Employer-subsidized health insurance is more affordable

Since Americans under the age of 65 are not eligible for Medicare, those who retire before the age of 65 must buy health insurance in the marketplace. It’s a costly expense. More than three-quarters of retirees in their 50s and 60s spend 10 percent or more of their family income for health care. That’s more than two and a half times what those still working pay for employer coverage. Working longer allows seniors to purchase medical insurance through a subsidized group policy until eligible for Medicare.

Working adults have better physical and mental health

Studies show people who stay in the workforce are generally healthier and happier than those who are fully retired. The death rate from all causes for people working past the age of 65 was 11 percent lower than for those who did not work, and seniors who worked were more likely to report that they were in good, very good, or excellent health. Working also provides opportunities to learn and socialize, which improves mental health and happiness. Many people feel better when they work, and physical and mental health decline the longer people are in retirement.

We have found that delaying retirement for just a few years can transform an average retirement income into a better one and has health and wellness benefits, too Even a short delay can help a person’s retirement readiness.

Regardless of your choice to begin enjoying the fruits of your labor or continuing employment, a financial roadmap or blueprint is essential in eliminating the guesswork involved in making that decision.  We are always here to help. Call us if you want to explore that roadmap to retirement (610-651-2777).



The American College of Financial Services, Bryn Mawr, Pennsylvania