Opinion

The worst retirement plan ever

Someday, it’ll happen to you.

Retiring, whether by choice or not, is a milestone in life. Yet, judging by some recent surveys, even those who are closest to that milestone, seem to brush it off like next year’s taxes, or accept their ill-fated planning and hope to work as long as they can.

Yes, working longer is now a “retirement strategy.” For many, it may be the only tangible plan for security in life’s latter years. And in many cases, it could be the best Plan B alternative, because even a few more years can bolster retirement income (check out “How working longer impacts your retirement” at Bankrate.com)

But if you’re going to have any kind of “strategy,” whether it's working longer, diversifying your investments or saving more, be serious about it. What’s troubling isn’t the fact that people are planning to retire later, it’s that they’re so indifferent about their planning, that working longer may be the only card they have left to play on the table. It’s a reserve parachute that may or may not open.  

According to a new Wells Fargo survey, 25 percent of middle class Americans say they'll need to work until at least age 80 to live comfortablly in retirement. Asked to name their biggest fear about retirement, 37 percent say they have “no fears,” because “it will work itself out.”  

The survey also found 69 percent of middle class Americans lack a written financial plan. Sixty percent of them say they don’t have a plan because either they are “overwhelmed,” or because it’s “pointless.” For these people, retiring at a later age may sound good in theory, but is it likely? 

There's a term for people in their 80s and 90s. It’s called the “oldest old.” New Census Bureau statistics show the oldest old are projected to increase from 1.9 million to 8.7 million by midcentury. 

If 80 is the new 65, it'll be useful to consider what retirement will look like that late in life. At older ages, according to the U.S. Census Bureau, the proportion requiring personal assistance ranged from 9 percent for those 65 to 69 years old, to 50 percent for those 85 years old and over. About 13 percent of Americans over the age of 65 have Alzheimer's and half of those over age 85 will develop Alzheimer's, or a closely related dementia, according to the Alzheimer's Association, the National Center for Health Statistics and the Center for Disease Control.

“The fact that the vast majority of middle class Americans expect to work well past the traditional retirement age has significant societal and economic implications,” Joe Ready, director of Wells Fargo Institutional Retirement and Trust said in response to the Wells Fargo findings. “Will people be physically and mentally able to work later in life? What will it mean for young people entering the workforce? And, how does our system of retirement savings need to be reformed to help reduce the savings gap?”

About the Author
Jenny Ivy

Jenny Ivy

Jenny Ivy is managing editor for BenefitsPro.com. She also covers benefits manager topics and can be reached at jivy@benefitspro.com.

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