Jeanette A. Tucker | 9/22/2005 2:38:35 AM
Devoid of bells and whistles, quiet and profound changes are revolutionizing the way Americans will live out their retirement, according to LSU AgCenter family economics professor Dr. Jeanette Tucker.
Employers, public policies and retirees themselves are retooling this stage of the life cycle, the family economist says.
Helen Dennis, author and lecturer on aging, employment and retirement, has outlined eight trends of the new retirement.
1. Retirement involves more years. It is now possible to spend more years in retirement than working. Increased life expectancies can enable employees to work 25 years, retire and then live another 30 years. Most people spend very little time planning for those three decades.
2. Retirement may involve fewer years. Research suggests that 70 percent to 80 percent of baby boomers plan to continue working beyond the traditional retirement age. Many will work into their seventies, and others say they will never retire. If working years increase and life expectancy remains reasonably stable, the number of years spent in retirement may be reduced.
3. Work is part of retirement. Monies earned from working no longer reduces full Social Security benefits. Retirees are also returning to work for reasons other than finances. They often desire the structure that work provides, to achieve a sense of purpose or to make a difference. Retirees with specific careers are being recruited back into the workforce to fulfill critical shortages.
4. Retirement is discouraged. Businesses are concerned that if all their retirement-eligible employees depart at once, they will lose a valuable human resource without qualified replacements. In effect, many employers are challenged to develop ways to compete against retirement so that valued older employees can be retained. Plans that allow employees to "phase" into retirement by working part time are growing in popularity.
5. Retirement is big business. Lengthened lifespans are creating opportunities for new products and services. Industries catering to this audience include travel, financial services, healthcare, housing, sports medicine and anti-aging products and services. Women are projected to be a powerful segment of this market segment.
6. Retirees are students. Large numbers of retirees participate in adult education programs. Retirees return to the classroom to learn, develop friendships and stay socially involved.
7. Retirees are the new social capital. Increasing numbers of retirees are devoting part of their lives to working – unpaid - for the public good. They desire to make a difference, and opportunities to do so abound.
8. Expectations are high. Retirees are hoping for a life of financial stability, friendships and high quality of life.
"Unfortunately, retirement remains a struggle for many," Tucker says, explaining that about one in four retiring baby boomers will be at risk financially, only half have an employer-sponsored pension, care-giving responsibilities are increasing and more retirees are raising grandchildren.
The family economist adds, however, "Despite these challenges, retirement offers more choices today than ever before." She advises following the recommendation offered by the American Savings Education Council:
• Know your retirement needs. Experts estimate that you’ll need 70 percent to 90 percent of your pre-retirement income to maintain your standard of living when you stop working.
• Check out your Social Security Benefits. On average, Social Security pays about 40 percent of pre-retirement earnings. The Social Security Administration sends out "Your Social Security Statement" about three months before your birthday each year. If you didn’t receive yours, contact the Social Security Administration at 1-800-772-1213.
• Learn about your employer’s pension or profit-sharing plan. Request an individual benefits statement from your employer’s Human Resources department.
• Contribute to a tax-sheltered savings plan. If your employer offers a tax-sheltered savings plan such as a 401(k) or 403(b), enroll today. Be sure to take full advantage of any match offered by your employer—matches are FREE MONEY.
• Ask your employer to start a plan. If your employer doesn’t offer a retirement plan, ask that it start one.
• Put money into an Individual Retirement Account (IRA). From 2005-2007 you can put $4,000 per year in a tax-deferred IRA. A special "catch-up clause" allows those 50 and over to contribute $4,500 in 2005.
• Don’t touch your savings. Withdrawals from your retirement savings can cost you principal and interest—and you may lose tax benefits. If you change jobs, roll over your savings directly into an IRA or your new employer’s retirement plan.
• Start now, set goals and stick to them. The sooner you begin saving, the more time your money has to grow. Set financial goals, develop a plan and stick to it. Make retirement savings a priority today to prevent financial struggles in retirement tomorrow.
For more information on family finances and consumer topics, click on the Family and Home link on the LSU AgCenter homepage, at www.lsuagcenter.com. For local information and educational programs, contact an extension agent in your parish LSU AgCenter office.