In “Working Past 70: Americans Can’t Seem to Retire,” author, Ben Steverman, considers the growing number of people age 65 or older who are remaining in the workforce, or re-entering it. It is a trend that is predicted to continue, and while working through one’s retirement years may be beneficial, it’s not always feasible and is accompanied by a host of new, employment-related challenges.
Click HERE to read the article, or continue reading below for the highlights.
Retiree-Age Employment Is Up
In over 55 years, the employment/population ratio for people age 65 or older has never been higher. From data collected between April and June of this year, a U.S. job report says:
- 32% of those ages 65-69 are employed
- 19% of those ages 70-74 are employed
The Bureau of Labor Statistics anticipates that this upward trend will continue. “By 2024, 36% of 65- to 69-year-olds will be active participants in the labor market, the BLS says. That’s up from just 22 percent in 1994.”
Factors keeping retirees in the work force:
- Living Longer
- Enjoy Work
- Want to Stay Alert
On the other hand, continuing to work after retirement can be a necessity in order to live comfortably. Retirees are feelings the heat of:
- Rising Healthcare Costs
- Lower Wages for Less-Skilled Jobs
- Decline of Traditional Pension
- Retiring Earlier Than Expected
According to the article, “When surveyed, 61% of American retirees say they retired sooner than they’d planned. That’s more than anywhere else in the world, according to the 2017 Aegon Retirement Readiness Survey, of 16,000 people in 15 countries.” Retirees are feeling the weight of this decision as their savings dwindle.
Return to Work
However, in regards to returning to the workforce, the article artfully states, “There’s a big problem with these plans. Just because you want to work doesn’t mean you can.” Retirees run into two major problems when returning to the workforce:
- Deteriorating Health
- Employer Disinterest
The quotes from Ruth Milkman, sociology professor at the City University of New York, put it well. “Although age discrimination has been illegal for 50 years, employers continue to see older workers as a liability. Frozen out of standard employment, older workers turn to more precarious (and less well-compensated) employment.”
According to the article, that transition is often from a traditional job to self-employment–spelling trouble for retirees:
- Often Necessitates a Switch in Occupation
- Decrease in Earnings (according to the National Bureau of Economic Research, a retiree switching occupations makes an average of $18,160 less each year)
- Less Likely to Be Successful if Retirees Need the Money (fewer year of education, few skills, more unhealthy lifestyle)
Is There an Alternative?
While continuing or returning to work may be beneficial for some, it seems to be accompanied by more pitfalls than paydays. For those who are itching to leave their working days behind them, what if there was a way to bridge the gap of early retirement and dwindling retirement savings? A way to reduce the risks to retirement income?
Some may be surprised to hear that the newly restructured HECM Reverse Mortgage may be just what the doctored ordered. Converting housing equity into usable dollars can
- Increase cash flow
- Decrease expenses
- Add dollars back into retirement savings
In the past few years, HECM has been widely endorsed by the retirement-income focused community. C.W. Copeland, Ph.D. at the American College, puts it succinctly, “By no means is a HECM right for every client, but every advisor worth their salt should have a cursory knowledge of the subject matter in order to, at a minimum, factor it out of their client’s equation.”
Furthermore, the ever-increasing number of Boomers retiring brings millions of dollars of untouched housing wealth to the table. Nearly 87% of Boomers own their own home. They’ve heard of Reverse Mortgages, but they don’t know how to utilize the power of HECM to their retirement benefit and they don’t know who’s information to trust.
There is huge potential for advisors to position themselves as advocates for Baby Boomers who are questioning the long-term success of their retirement plans. Going back to work may be one option to recommend, but the advisor who can intelligently discuss the HECM with their Boomer clients, will be the Boomers’ saving grace.