Many baby boomers seek to transition into retirement but the majority of employers don’t have much to offer in terms of flexibility.
As reported by the Transamerica Center for Retirement Studies, seven in ten baby boomers have been reported working after they’ve turned 65, wanting to continue working even after they turn 65, or have no plans to retire at all. This, however, shouldn’t be misinterpreted as them wanting to continue working full-time.
To be more precise, 42% of baby boomers would like to slowly transition into retirement by working fewer hours.
The report “What Is ‘Retirement'? Three Generations Prepare for Older Age,” based on the 19th Annual Transamerica Retirement Survey of American workers says that “Baby Boomers (born 1946 to 1964) have rewritten societal rules at every stage of their life — and retirement is no different. They are at the forefront of defining retirement as a new phase of life that can bring freedom, purpose and enjoyment.”
Challenges on the road ahead
Whether or not these expectations are realistic or not is open for discussion. The Federal Reserve published their “Report on the Economic Well-Being of U.S. Households,” and in it, they state that half of the retirees in 2017 retired before they turned 62, followed by another quarter of retirees between the ages of 62 and 64.
The plan to transition into retirement by working fewer hours might be harder done than said, as only 29% of baby boomers reported their employers offered them with some more flexible options for this purpose, according to the Transamerica report.
Catherine Collinson, CEO and president of the nonprofit Transamerica Institute and the Transamerica Center for Retirement Studies had this to say on the topic: “Today’s workers envision a flexible transition into retirement. Employers tend to think of work and retirement as an all-or-nothing proposition.”
She further adds that, “It’s a big disconnect that baby boomers envision a flexible transition to retirement in the absence of the ability to do so.” The reason behind her saying this is that a great majority of employers don’t possess any programs that would support this kind of retirement. No lifestyle and financial counseling are being offered, which makes phased retirement quite challenging.
Two major reasons why most baby boomers plan to continue working after they turn 65
According to the same report, the two major reasons why most baby boomers plan to continue working after they turn 65 are financials – 80%, and healthy aging – 72%.
A great percentage of the baby boomer workforce (78%), are putting their money into savings in company-sponsored 401(k), or some other similar forms within or outside their workplace, and they started doing this at 35, according to the report. Most of them were in the middle of their carrier when their plans changed from defined benefit plans where their employers provide a guaranteed retirement amount to the 401(k), or similar defined contribution plans.
What are ‘defined contribution plans’?
The way defined contribution plans work in typical conditions is by employee contributions, with a certain percent of it matched by their employer. Any gains or losses in these contribution plans are subject to change, in accordance with the financial markets’ performance.
Baby boomers, usually save 10% on average from their annual salaries, according to the report. All household retirement accounts have shown that, on average, they have saved $152,000. This would suggest that half of these accounts have more, while the other half has less than this amount.
Not prepared enough
Even though a great number of baby boomers plan to continue working after they turn 65, not many have started to prepare themselves in terms of their health, advancing their job skills, or financial planning for longer retirement.
This online survey was conducted between October and December by the Harris Poll. It included 5,168 workers that are not self-employed, and 1,477 of those were baby boomers.
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