The average age at which an American worker retires is now reported to be 62 and that's the highest self-reported average age in 23 years.
A recent Gallup study showed that in 1993 the average age was 57 and even as recently as 2010-2012 the age hovered at around 60.
But for many, even age 62 may be too early. No doubt that the average age has creeped up, with the lack of a reliable program of saving/investment during their lives, and/or the Great Recession "mark-down," it's not hard to understand the "need" to work longer.
And, there are for sure, workers who are working because they love their work or they feel more fully alive and involved when they are pursuing their passion so they've chosen to continue at their life's work. And, I think, we can be relatively certain that the extra money doesn't hurt either. Also, I'd bet that as the percentage of total jobs moves more towards "technology" and less toward, manual labor, we wouldn't be surprised to see the age creep even more in the future, just as a natural outgrowth of the societal impact on work itself.
Ironically, about the same time as the Gallup organization was asking about retirement ages, they were also asking the American public what their biggest financial fear was and as you might image, not having enough for retirement came in at the top of the its at 59%. The harmony between "working longer" and "not having enough for retirement" is almost scary, but, this too is not to be unexpected.
So what's the answer?
I think in the last few years I've written more than a few blogs about changes that need to take place in the workplace, whether that's that we provide new incentives for increasing investments in saving for retirement, develop a newer/better retirement plan system or some other improvements (if you're old enough you can remember when your pension might have been 66% of your highest three years average earnings).
Surely we can do a much better job on financial education, an area where we do very little in relation to what we could potentially do. Teaching people how to handle and manage money is a skill that pays benefits for a lifetime. And middle school, yes, middle school, is a good place to start.
I think that actually planning for your future also pays substantive dividends (no pun intended) and if possible or preferred, people should commit to working with someone who can help them understand the financial structure of working toward, to and through retirement.
What passes my understanding is how frequently we seem to refer to the retirement problem as if there's no existing means to remedy it. Odd isn't it that when we talk about childhood obesity or obesity in general we can pretty quickly come up with "diet and exercise" as steps that should be undertaken to stem the tide on weight gain.
Likewise, shouldn't the first thing that comes to mind when we're talking about providing for our own financial security be something like, "set your goals, have a plan..?"
So, what's the problem?
Over the thirty years that I've been in the financial services profession, there's been the often used saying that "more people plan their vacation, than plan their finances" and from what I've seen that is a true statement.
But the key to all this may lie in the fact that we CAN plan our vacation and if we CAN plan that, then we've got the appreciation/understanding/ability TO plan anything else. So whey don't we?
There a a host of rationale and irrational reasons we don't and a series of blogs could be written explaining, validating or invalidating almost all of them in some way.
In the interest of brevity, let's conclude on this thought.
"If you don't know where you're currently situated on a map, you have little idea in which direction your next step should be."
Figuring out where you are doesn't take planning it takes quantification. Figuring out where to take the next step means you've been moved to action, an often unintended benefit of the "quantification" process. This is the nexus at which we cross from "quantify" to "plan."
Even if you're not a planner, take the first small step and "quantify."
Knowing where you're situated is seldom ever a bad thing, trust me on this one.