Meet Fiona Bayliss, 91. She is active, healthy, involved and…working.
The owner and sole employee of Fiona’s Antiques and Gifts in Glendale, Calif., is part of what Catherine Collinson, president of the Transamerica Center for Retirement Studies, says is the aging population’s most sweeping trend—the working retirement.
Nearly two of every ten 70-year-olds are working today, according to the Bureau of Labor Statistics. And some 40 percent of Baby Boomers, who are just beginning to hit their mid-60s, say they expect to work past age 70, if they retire at all, according to a survey by the Transamerica Center, a non-profit foundation funded in part by Transamerica Life Insurance Co.
A confluence of factors – many of them financial -- have made the vision of a leisurely retirement on the golf course or front porch as outmoded as petticoats, says Alicia Munnell, director of the Center for Retirement Research in Boston.
The Baby Boom generation is healthier, likely to live longer and is more likely to need costly long-term care than previous retirees. Meanwhile, the Social Security system is fast running short of cash, which has revived talk about raising the retirement age on the nation’s cornerstone retirement safety net once again. Social Security revisions in the 1980s raised the age for people born after1942 to collect full benefits to 66 or 67, depending on the year they were born.
Company pensions that once promised regular monthly checks to nearly half of full-time workers are being phased out in favor of so-called defined contribution plans, with names such as 401(k), 403(b) and 457. Fewer than 10 percent of private-sector employees still have the old- style pensions that paid steady benefits for life; the new plans pay out what you paid in, plus interest or dividends. For those who didn’t save enough or didn’t invest wisely, they could prove vastly inadequate.
If that weren’t enough, the investment landscape turned sour just as Baby Boomers were getting ready to quit the working world, leaving them with little or no return on their stock portfolios for more than a decade.
The bottom line: People who felt certain they were racing toward a rich retirement in 1990 are far less certain of their ability to finance retirement today. “If you have a job, I think you should cling to it,” says Munnell.
Of course not all older workers are in the job market simply because of finances. “I don’t think there is any evidence that having 30 years of leisure and no obligations of any type is psychologically beneficial,” says Laura Carstensen, director of Stanford University’s Longevity Center. “People like to be useful.”
Ask Bayliss whether she plans to retire, and she looks surprised: “Retire? What would I do? Sit home and watch the wall paper fade?”
Then again, she admits that if she had more money, she might travel and hire a clerk or two to help out. Right now, a cadre of friends help in the store when Bayliss needs to restock or take time off. If she wanted to retire, she couldn’t, she adds. She simply doesn’t have the savings to do it.
Some 50 years ago, she and her husband bought the building to launch her shop, stretching their finances to do it. He died of cancer when she was 46, leaving her with two mortgages – one on their home and one on the shop – and a young son. There just wasn’t money to save. “You try to make the best of things,” she says.
There are things you can do to ensure a better outcome. You may still choose to work into your 90s, but more assets mean more options.