Investment guru Warren Buffett is still rocking his job in his 80s. A guy who could easily afford to retire early has blown past traditional retirement ages with no signs of stopping.
But not everyone can do that. In fact, most people do not. The average retirement age is 65 for men and 63 for women. A sobering 39% of fully retired workers say they retired sooner than planned, according to an Aegon Retirement Readiness Survey. The most frequently cited reasons for doing so are ill-health or employment/job loss (29 percent and 25 percent respectively).
If you’ve ever justified slacking off on retirement saving by saying you’ll work all the way up to age 70 to get the maximum Social Security benefit, here’s a reminder: How long you work may not be entirely up to you.
A study from the Center for Retirement Research at Boston College has found that in many cases, even for white-collar jobs, a decline in cognitive ability may cut short a career just as declines in strength or agility may end a labor-intensive job.
That makes planning for retirement today more important than ever. Especially when your retirement may last decades.
Early retirement, ready or not?
An unexpected early retirement won’t just cut short the number of wage-earning years you are counting on. It also could torpedo the Social Security benefit you may have anticipated after plugging your planned retirement age into the calculator at the government’s my Social Security site. That’s because retiring before full retirement age (FRA) means monthly benefits are reduced, for life.
The study examined hundreds of careers and shed light on those most likely to be curbed by declining cognitive skills, diminishing eyesight, and dexterity.
“Researchers and policymakers frequently suggest that individuals should work longer to boost their retirement preparedness,” the study reported. “Often it is assumed that while this advice may be difficult for blue-collar workers to follow, white-collar workers can more easily extend their careers. While it is true that blue-collar workers are more likely to rely on abilities that decline early, workers in some white-collar occupations face similar challenges. Indeed, for white-collar workers that rely on fluid cognitive abilities, quick reaction times, and fine motor skills, retirement tends to occur relatively early.”
You can hope to work as long as you want, but nobody can guarantee things won’t change. And the list of jobs that fall victim to unexpected early retirement is eye-opening.
Boston College researchers created a “Susceptibility Index” ranking more than 950 occupations by likelihood of early retirement due to health and other factors. Not surprisingly, “dancer” fell at the bottom with the highest age-related risk. There aren’t a lot of 70-year-old full-time professional dancers. That was followed by helpers working in construction, mining, and fishing. At the top – those least likely affected by age – were benefits managers, teachers, and sociologists.
But look in the middle, around number 475, and you find medical technicians, music directors, electrical engineers, surgeons, and retail sales workers. Those might not be considered physically demanding jobs. But the index demonstrates even those positions are subject to the effects of aging.
The study and the index demonstrate that nothing is a given. Planning to work late into your 60s or 70s isn’t a guarantee and doesn’t replace a lifetime of retirement saving and financial planning.Even if you plan on working into your 70s, take a look at this study. It shouldn’t discourage you. It’s great if you love your job. Go for it. But be aware hoping to work longer doesn’t replace responsible retirement saving.
Stay current in your industry because cognitive abilities are as important as physical abilities. And look at retirement savings with an eye toward “what if,” as in “what if I am laid off and can’t find something new?”
“The notion that all white-collar workers can work longer or that all blue-collar workers cannot is too simplistic,” the study concluded. “Instead, it is important to consider the particular abilities required by an occupation and whether these abilities decline significantly by the time workers reach typical retirement ages.”
Things to Consider:
• Remember, when you retire might not be entirely up to you.
• Consider saving more, when possible, just in case you can’t work as long as you hope. Like the Boy Scouts, “Be Prepared.”
• Stay up-to-date with developments in your industry. Staying on top of technological advances is crucial.