As a population, Americans are living longer now than ever before. While naturally this is good news, increased longevity of lifespan has serious financial implications for your savings and even your ability to live comfortably during retirement.
Americans are fearful about being able to afford retirement.
But with 78 million Baby Boomers (born between 1646-1964) entering or approaching their retirement, the U.S. faces a looming aging population that will challenge the nation’s ability to handle this demographic.
How this aging boom will impact government programs like Social Security and Medicare is of utmost concern among most Americans, according to the results of a recent Harris Poll, which surveyed 2,232 adults across various generations, including Millennials (aged 18-37), Gen-Xers (38-49), Baby Boomers (50-68) and Matures (69+).
Americans are nearly split on whether or not the U.S. can afford having more people living until age 80 and above, with 34% saying we will be able to afford it while 38% say we won’t.
Social Security & Medicare Are Strained
Looking specifically at U.S. health care, 51% of American adults believe the nation’s health care system won’t be able to handle large number of people with chronic medical conditions. Meanwhile, just 24% believe the U.S .will be able to handle this population impact. Another 24% said they “are not sure.”
“As the number of people over 65 increases substantially, many economists believe the cost of Social Security and Medicare is likely to increase a great deal if we do not change these programs,” writes Harris Poll in its findings. “Concerns surrounding these programs top the list of worries Americans are facing with the looming aging population.”
Nearly six in 10 adults don’t believe there will be enough money left in Social Security (58%) and Medicare (59%) for them by the time they reach the appropriate age to begin utilizing these government entitlements.
For many retirees, Social Security and Medicare are critical assets to rely upon to for additional cash flow and help with covering health care expenses during retirement. But further challenges and strains on these programs could leave many retirees seeking other avenues to bolster their savings. And that could mean delaying retirement to work longer.
Working Longer to Save More
Putting off retirement for a few years to work longer is becoming part of the new normal among many older Americans looking to build some extra income before finally retiring from the workforce.
Encouraging more people over age-65 to work longer was the most popular option the U.S. should pursue in the next five years in efforts to control the budget deficit, and ultimately alleviate the strain on programs like Social Security and Medicare, according to 43% of voters participating in the Harris Poll.
This option was also most popular among Matures aged 69 and older, with 58% wanting people over 65 to work, and 50% desiring an increase in eligibility age for both programs. However, reducing Medicare and Social Security benefits were the least popular avenues of controlling the budget deficit, with just 7% and 8% of Matures in favor of doing so.
Employment is now becoming part of the retirement experience, according to a report commissioned by Bankers Life Center for a Secure Retirement earlier this year, which surveyed 1,005 middle-income Baby Boomers and 2,293 retired Boomers aged 51-69 with annual incomes ranging between $25,000 and $100,000.
Of those surveyed, 28% of retired Boomers said they are either currently employed or have been employed for pay during retirement, whereas more than six in 10 (61%) said they are working because they want to work, not because they have to work. By contrast, 71% of non-retired Boomers say they are working because they have to work.
Work doesn’t have to be all that bad, either. In the report, Bankers Life suggest retirees consider working even if it is just part-time, as doing so can not only generate additional income, but can also provide added benefits like more opportunities for socialization or the chance to pursue a new endeavor in a new field.
“Consider work in retirement, even if it is only part time,” said Scott Goldberg, president of Bankers Life. “Because we are living longer into our retirement years, the financial and health benefits of working longer can enhance the retirement experience.”
Can Working A Little Longer Really Make Your Retirement Secure?
As Americans continue to live longer and enter their retirement years in droves over the coming years, the U.S. economy and health care infrastructure today is on the cusp of an unprecedented population shift—the effects of which will create a ripple effect on the retirements of many.
To determine if working longer, or working part-time during retirement, fits into your financial planning goals— you need a really good understanding of your current finances and a detailed plan for your retirement.
A good retirement calculator can do this for you. The best retirement calculators will enable you to easily try different retirement dates, have different tiers of retirement income and enable you to manipulate all of the detailed information that makes up your financial future. You can also work with a financial adviser who can advise you on these details.
