Retirement Age Rising : Center for Retirement Research. The average retirement age is on the rise. MarketWatch recently published an article penned by Alicia Munnell, director of the Center for Retirement Research at Boston College, explaining some of the reasons why.
We know that many retirees are living longer, and as such, they’re likely to outlive their savings. Many are destined for retirements well below their current standard of living. For men, the average retirement age was nearly 65 in 2015 and around 62 for women.
Munnell points out:
“Social Security will provide less relative to pre-retirement earnings; 401(k) balances are meager; and half the private sector workforce does not have an employer-sponsored plan. At the same time, with rising life expectancy the number of years spent in retirement has increased dramatically, health care costs are high and rapidly rising, and interest rates are at historic lows… Retirees are in trouble.”
She suggests three possible solutions to help mitigate the current savings crisis: encouraging people to work longer, helping them tap the equity in their homes, and offering auto-IRAs for employees who currently don’t have access to workplace retirement plans.
Munnell also cites several trends that have factored into the rise in the retirement age since the mid-1980s, including declining Social Security benefits, the shift from defined benefit to defined contribution plans, improvements in education levels, increased life expectancies and better health, and the decline in health insurance for retirees, among others.
All of these mean many employees are choosing to remain on the job longer. And that’s not a bad thing. As a plan sponsor, it can help to maximize the wisdom and knowledge of your older employees. Embrace the opportunity to help them expand their skillset through continuing education, or have them mentor younger workers who may one day fill their shoes. Offering a phased retirement program is another idea to help older employees transition more gradually out of the workforce, at their own pace.
That said, sponsors should also continue to focus on educating younger generations of employees on the importance of maximizing the benefits in their workplace retirement plan. That means helping them to understand why they should save as early as possible and what they’re saving for — a (hopefully) comfortable, financially secure retirement. That’s a goal worth striving for, no matter what their age when they decide to exit the workforce.
