Retirement is Not What it Used to Be

Retirement used to be such a simple concept. It required that you work steadily for 40 or 45 years and then you retired at the age of 65. The U.S. economy would reward you for a life of work by supplementing your savings in old age with a Social Security pension. Pretty simple, huh?

All you had to do was hold down a job, and one day you’d find yourself retired to a life of relative comfort. It’s simply not that way anymore. Just ask the members of the baby boom generation that grew up with this understanding. There are 77 million members of the generation born between 1946 and 1964. The oldest of the boomers turn 65 this year and retirement for most of them is anything but a comfort.

A survey done by the American Institute of Certified Public Accountants shows that retirement plans have been disrupted by the nation’s economic struggles over the past three years. The survey found that a large chunk of the baby boomer generation–which represents 37 percent of all people 16 or older–has been forced to reevaluate their futures.

More than 85 percent of boomers reported in the survey that they expect to work longer than anticipated because of a lingering recession and the effect it has had on retirement savings and job stability.

Nearly a third (32.3 percent) say they now intend to work 1 to 3 years longer than they expected, while 39.7 percent think they will now work another 4 to 6 years longer. A smaller number (9.8 percent) expect to work 7 to 10 years more than anticipated and 3.7 percent say they will have to work more than 10 years longer.

“Boomers have been scarred by the economic turmoil of the past few years and face complex challenges going forward,” said Clark M. Blackman of the institute.

Blackman added that boomers may be more optimistic about stock markets today than they were a year ago, but uncertainties caused by the economic downturn have cast a dark cloud over retirement plans. Some boomers have lost their jobs during the current recession, which means they will have to work longer to recover that lost income, or they may be working longer to help their children or grandchildren who have also been jostled by the job market.

A corresponding decline in home values and rising education costs also play a factor in working longer, he said. And, the fallout from the economic downturn may eventually prove to be even worse than the survey revealed. The survey mentioned above found that the accountants surveyed typically have $500,000 to $5 million in assets. Those are mainly middle- and upper class families who have been able to set aside significant retirement savings.

But what does that say for millions of Americans who have modest or no retirement savings? The Social Security Administration already is ratcheting up qualifying ages for younger workers. That means that an age-65 retirement will become increasingly rare in the years ahead.