With plunging stock values and declining home prices, an increasing number of Baby Boomers are postponing retirement according to a recent article published by Time magazine. The article cited an AARP study conducted in October 2008, which found that 65 percent of people over the age of 45 say they will postpone retirement if the economic situation does not improve significantly. In the last few months, stocks have continued to decline and the economy formally entered a recession.
According to Time, Many policy analysts think delaying retirement is a good thing. If Boomers work two to four years beyond the traditional retirement age, they will be better off financially and the country will be better off fiscally. In fact, the article also cites a November 2008 study by McKinsey Global Institute estimates that a two year increase in the median retirement age - from 62.6 to 64.1 - would add $13 trillion to the U.S. GDP during the next 30 years, while also reducing the number of Boomers without enough retirement savings by half.
Without an unexpected burst of productivity or a significant upsurge in investment per worker, Time says, Boomers' reduced working and spending will reduce the U.S. GDP growth by 25 percent over the next three decades. With the largest number of retiring workers and not enough replacements, the Department of Labor projects a labor shortage by 2010, with education, health care, engineering and nursing to experience a scarcity of workers, according to the article. Although Boomer financial woes and a coming labor shortage are not favorable situations, postponing retirement will be beneficial for Boomers, their families and the economy.
What do you think? Will most Boomers have the option to work longer – especially given current unemployment figures and economic conditions? Also, what if they aren’t healthy enough to work past 65? What alternatives exist? How do you counsel your Boomer clients about this issue?
To read the complete article featured in Time magazine, please visit http://www.time.com/time/business/article/0,8599,1860323,00.html.
