5 New Realities of Planning Your Retirement

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By Tom Sightings

Pensions are a distant memory for many of us. We all worry about the future of Social Security and the escalating cost of health care. Meanwhile, our life expectancies have increased, and we can look forward to a longer, healthier and more expensive old age. But Americans are practical. We adjust our lives to deal with changing times. Here are some of the new realities of retirement.

  • The traditional career path is a relic of the past. The experience of a decades-long full-time job that is followed by full-time retirement is now the exception rather than the rule. Instead, many employees are leaving work in their 50s and taking lower paying temporary jobs for several years before full retirement. People in this stage of their working life have different attitudes and expectations compared to full-time employees, which presents new challenges and opportunities for both management and workers.

  • Employees have less control over the timing of their retirement. Age discrimination is illegal. Yet, many workers in their 50s and early 60s have lost their jobs and been passed over for new positions. Other people jump into retirement, even if they can't really afford it, because they are sick of their jobs and dream of an easier life –- if only they could survive without a paycheck.

  • More people choose semi-retirement. Due to economic uncertainties, a significant number of retirees now hold part-time jobs. Just over a third (35 percent) of Americans work full time at age 62 and about 14 percent work part time, according to the National Institute on Aging, By age 68, only about 13 percent work full time while 19 percent work part time. Retirement is not an all-or-nothing proposition. The downside of a part-time job is that you're still working. But for many people a part-time job cushions the blow of a layoff, or allows them to leave behind the drudgery of an old job to try something new and more interesting. A part-time job also supplements income from Social Security and a pension and extends the life of their retirement savings.

  • Many people enjoy more flexibility. In 1970, Social Security introduced the delayed retirement credit, meaning that employees working beyond normal retirement age continue to build up Social Security credits. Now workers have the flexibility to retire anywhere between ages 62 and 70 without financial penalty. Theoretically, no matter when you retire, you collect the same amount of Social Security benefits (depending, of course, on how long you live). Also, the decline in defined-benefit pension plans may have a silver lining. Today, fewer companies require workers to retire at a specific age, so you can often stay on the job longer if you want to. The net result is more choice for workers. You can keep working, but if you harbor a dream to do something different -- try a new job, open your own business, make your own crafts or pick up some extra cash as a dog sitter or house sitter -- then early retirement is more feasible today than ever before.

  • People who are semi-retired spend more time in part-time careers. Those who leave the full-time workforce early need to make more income, largely because they have spent fewer years earning a salary. Therefore, instead of taking full retirement at 66, many people keep their part-time jobs until age 70 or beyond to make up for lost wages earlier in their career. So, if you do take a part-time job later in life, make sure you really enjoy what you're doing.

Some people question: If you're still working, how can you say you're retired? The answer is not to think of retirement as a time to sit around and do nothing. Instead, it is a time, at last, to do what you want. For increasing numbers of Americans this means scaling back and working fewer hours on a less stressful basis, either for your old company or in an entirely new environment.

Working in retirement can provide the best of both worlds. You're free from the daily obligations you've been shouldering for years, but you're still making money. You have some structure in your life, and you're meeting new people. You are also doing something useful and making a difference in the world.

Tom Sightings blogs at Sightings at 60.