Summer is over. It's back to work.
Get used to working. Many of us - especially those age 50-plus -
may be doing it longer than originally expected.
A slumping stock market is just one of the reasons. Changes in
Social Security laws, stingier corporate pensions, and other
economic and social factors mean many Americans will wait longer to
retire and may have less gold in their golden years, experts say.
Especially hard hit: those closest to retirement with the least time
to rebuild nest eggs - or build them from scratch.
"Americans value retirement so highly they will certainly still
retire," says John Rother, public-policy head for AARP, which
lobbies for older Americans. "It is just that they may retire a
little later with [a lower] standard of living than they had hoped."
There is already some evidence older Americans are staying on the
The portion of the population working or looking for work has
fallen for those under 55. But labor force participation has risen
in the past two years for people age 55 to 64, in part due to the
aging of the population.
Also, "older Americans are sensing that their retirement nest
eggs have evaporated and [they] need to work longer to rebuild"
them, says Mark Zandi, chief economist at Economy.com.
The changing retirement picture is setting off both political and
economic ripples. Widespread voter concern about retirement issues
is one reason Congress is expected to take up pension reform before
heading home for this fall's elections. And steps to strengthen
retirement savings accounts are an element of a revised economic
program President Bush is considering.
It is no surprise that the stock market's slump is a key factor
in the changing retirement outlook. Between March 2000 and the end
of 2001, some $5 trillion in stock market wealth evaporated,
according to the Employee Benefit Research Institute (EBRI). Many
workers saw their 401(k) plans and individual retirement accounts
take major hits.
But the stock slide is only one factor reshaping retirement in
the US. For many individuals, it is not the most important factor.
Why? Most Americans have only modest stock holdings. In fact, 4
in 10 people in the 55 to 64 year age bracket own no stock at all,
according to the Federal Reserve. For those nearing retirement who
do have stock, the median portfolio is just $47,000.
"The change in the stock market affected some people's plans to
retire early," says David John, a research fellow at the Heritage
Foundation, a conservative think tank. "But these were upper income
workers, not a large portion of the work-force."
Other experts argue that the drop in financial markets will speed
up changes in retirement that were coming anyway. "Even if markets
had not contracted, you would still see rebellion against the
existing retirement model, because it is failing to provide [what]
modern, healthy older adults are seeking," says Ken Dychtwald, an
expert on retirement and author of "Age Power." He says older
Americans "want to stay in the game even if with less time and less
One key factor that will push Americans toward later retirement
is a change that takes effect in January in the Social Security
program. The age for full retirement benefits has been 65 since the
program began. But beginning with people who turn 65 next year
(those born in 1938), the age at which full benefits can be
collected will gradually increase, until it reaches 67 for people
born after 1959.
Those born in 1938 or thereafter can still collect Social
Security benefits as early as age 62. …