What To Do About Plans To Delay Retirement

Also, people planning on working longer are a lot less confident that they will have enough money to live comfortably in retirement, be able to pay for their basic medical expenses, or even be able to pay for their basic expenses.

Clearly, most are planning to work a lot longer because they feel they have to in order to be financially secure in old age.

Those who are planning to work after age 65 have reached such a large proportion (42% of all workers) that adjustment to the primary approach to retirement planning seems necessary. The primary approach says that workers should calculate a number representing how much they must accumulate by a certain date in order to have a financially comfortable retirement.

The approach has merit because it focuses attention on retirement. As a result, many fine calculators have been designed to help people calculate this particular number.

But today's retirement realities are such that, for many people, that one number is simply not enough. The problem is that many people do not get to work as long as they want. Illness, disability and other uncontrollable factors stop many people from continuing to work. In fact, in surveys I have worked on, about two in five retirees have consistently stated that they had to retire before they planned, usually due to illness or disability.

Of course, the risk of illness or disability goes up with age. With more people planning to work longer, the nation now has workers who, without really being aware of it, are placing themselves at considerable risk of having to stop work before they reached their accumulation goal.

It is relatively easy for people to believe that, if their current rate of savings is not enough, they can simply plan to work until 70. But the risk of waiting to save enough is substantial due to the increasing risk of illness or disability at the older ages.

See the box for a recommendation on a new step in financial planning that would help address the issue.

Just deciding to work longer is a long awaited evidence of realism. But it is a high risk strategy. Financial advisors should stress to clients the need to have the basic accumulation accomplished before the high risk years associated with involuntary retirement.