When should a consumer retire? That’s a major question.
Retirement usually means a reduced income (even with Social Security) and less means for consuming goods and services.
Not so long ago, the typical retirement age was 65.
A person reaching that milestone would be shown to the exit with a smile and a handshake and (usually) a pension and perhaps a gift such as a gold watch.
How times have changed — and not necessarily for the better.
On one hand, people are living longer now, so the retirement phase of one’s life is usually lengthier than it used to be.
On the other hand, nowadays the parting gift is mostly a thing of the past. There is seldom a handshake. And only a fortunate few have any sort of pension.
Sure, there were always exceptions to retiring at 65. Commercial airline pilots, from 1959 until 2007, had to hang up their wings at age 60. Today their mandatory retirement age is 65, though some folks are pushing to raise it to 67.
Either way, that won’t help today’s air-traffic controllers, who are forced off the job at 56.
When I was born, stewardesses were forced to retire at a very young age. Each airline set its own rules, but the age limit hovered at about 32.
On the other hand, bosses, owners and the self-employed, then and now, often remain on, even in their golden years.
People think about retirement as being a distant event. And then one day the time has come.
Many people who picture retirement imagine a gradual easing up on the workload, slowing down without stopping. But a gradual transition, such as by reducing hours or shifting to a less-demanding job, is not always possible.
More often, workers retire abruptly. And never work again.
The aging process takes its toll on a worker’s body and mind. Folks who thought they would work forever suddenly find themselves physically or mentally unable to keep up.
Plus, companies go out of business. Or lay off workers.
Sure, plenty of people around us continue to work into their 70s, and maybe beyond. But those folks working in their 70s are probably continuing to work at their long-lasting jobs. They’re not among the newly employed.
It’s rare for any employer offering semi-decent jobs to hire people over 55. Often, retirement is not planned. It is merely thrust upon a worker as their skills fade or no longer suffice. Somewhat bewildered, they are escorted to the exit. Or worse, informed via email not to show up anymore.
The average American retires not at 80, or 70, or even 65, but at 62. That statistic comes from two different surveys of working and retired Americans, one from the Employee Benefit Research Institute, the other from the Transamerica Center for Retirement Studies.
The Employee Benefit Research Institute survey found that three-quarters of working-age adults said they expected to continue working for pay in retirement. But only 30% of retirees reported ever having done so.
One can retire from a job and take on a different job. Or one can “retire” by collecting Social Security while continuing to work for pay.
Two-thirds of workers over 50, says Transamerica, expect to retire after 65, or not to retire at all.
But we often don’t get to retire when we want. Nearly half of those who retired earlier than planned blame their health, according to Transamerica. Physical limitations, illness, even disability can roar to the surface and linger.
It also found that six in 10 retirees were fully retired before 65; that only three in 10 Americans retired after 65 — or say they do not expect to stop working; and that the median age for Americans to retire is 62.
In short, Transamerica found older workers expected to retire at 67 but ended up retiring at 62.
When you retire at 62, it’s seldom by choice. Medicare doesn’t kick in until you’re 65. The need for affordable health insurance makes many workers want to last until 65.
Sixty-two is also when one may begin receiving Social Security benefits. Those who can afford to postpone collecting Social Security get rewarded. By waiting (any amount of time up to eight years) before collecting, one’s monthly payment — for life — increases nicely.
Yes, Social Security helps, but for many recipients it provides, at best, bare subsistence.
My mother’s cousin Miltie and his wife, when they were in their late 70s or early 80s, would fly annually from Florida to New York to visit family. They always stayed at my mother’s house, and from there would visit offspring and siblings.
Without a place to stay, Miltie once told teenage me, they wouldn’t be able to afford to visit every year.
“But you have Social Security,” I naively stated.
His exact words from 45 years ago elude me, but I remember Miltie scoffed before explaining that Social Security is minimal and one cannot live on it.
How right he was.
Especially for those who have monthly payments for cars and mortgages.
Consumers should be aware their income tends to decline sharply upon retirement and should plan accordingly.
