Facing retirement: '70 is the new 65'

By Diane Stafford | McClatchy/Tribune News
July 26, 2009

The recession is keeping some older workers on the job beyond the time they intended to retire.

In some industries, such as nursing, that's seen as a good thing -- it's helping to ease worker shortages.

In other workplaces, the lack of turnover makes it difficult for younger workers to land jobs, experts say.

Whatever the cause or effect, two-thirds of Americans 55 to 64 are in the workforce -- the highest participation rate among that age group since the Bureau of Labor Statistics began keeping track in 1948.

"Had the economy been stable, I wouldn't have given it a second thought," said Rick Wright, 60, an information technology worker who was eligible to retire but decided to keep his job.

"I'm no economic genius, but I'm afraid of inflation when they pump all this recovery money into the economy. I'll have a good retirement wage, but even then, I have to be careful."

Examples of similar deferred retirements show up across the nation.

The American Institute of Certified Public Accountants said 35 percent of its financial-planning professionals' clients said they were postponing leaving the workforce because of the economy.

The institute said two-thirds of the clients who said they would delay retirement expect to work an additional five years.

"What this suggests is that 70 is the new 65," institute Vice President James Metzler said in connection with the report's release.

Ten years ago, 59 percent of the 55-to-64 age group was in the workforce. In May, that jumped to 65.6 percent, with 1.6 percentage points of the growth occurring since May 2008.

Among workers 65 and older, the labor force participation rate has grown even more precipitously. In May 1999, the participation rate was 12.5 percent; in May 2008, 16.6 percent; and in May 2009, 17.2 percent.

The dramatic statistical changes in the last 12 months point fingers at the recession as a cause.

Melinda Dixon, a financial adviser with Edward Jones, said she frequently has heard clients say, "I guess I'm just going to keep working."

"The primary concern is about when they'll be able to retire because their portfolios, their whole net worth is down," Dixon said. "People are afraid."

But choosing to remain on the job has not been an option for thousands of older workers who have been laid off.

Those who were jettisoned from the workforce have fueled an estimated 25 percent increase in new claims for Social Security early-retirement benefits, said the agency's chief actuary, Stephen Goss.

Mercer, a national benefits administration company, offered a reason why many older workers were at least trying to stay put. It analyzed its defined-contribution retirement account data and found that since the end of 2007 until May, participants 55 and older had an average account balance loss of 16 percent.

"Near-retirees face a huge challenge in accumulating adequate savings for retirement in the midst of recent economic volatility," the Mercer report said.

Fewer retirements can be good for some employers. They keep experienced workers and have less costly turnover than expected.

But delayed retirements are thwarting younger workers trying to break into their chosen professions.

The National Association of Colleges and Employers said job offers for 2009 college graduates ran 22 percent behind those in 2008.

While the recession is the main cause, some new graduates -- in fairly robust employment fields such as health care and education -- are not landing jobs because anticipated vacancies have not materialized.

The desire among nurses and other workers to hang on to their paychecks is understandable. Most workers are better informed about the true costs of maintaining their lifestyles in retirement, so there is more motivation to keep earning while they can.

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