Bloomberg reports that America’s elderly are twice as likely to work now than they were in 1985 because they simply don’t have enough money. Insufficient social safety nets and retirement savings plans combined with climbing health-care costs are making early retirement more and more difficult.
A new report from United Income has shown for the first time in 57 years, labor force participation among retirement-age workers has gone above the 20 percent mark. The largest spike in employment comes from college-educated older workers. The percentage of employees aged 65 or older with an undergraduate degree is now 53 percent. In 1985, it was 25 percent.
According to Elizabeth Kelly, senior vice president of operations for United Income and a former special assistant to the president at the White House National Economic Council during the Obama administration, there’s a mismatch between the older workers who need the income the most and workers who are able to work and continuing to work. “These are the more educated, wealthier individuals in better health who are continuing to work, but it’s probably their less-educated, working-class counterparts who need to work the most,” Kelly said.
“By 2024, baby boomers will have reached ages 60 to 78,” a BLS report noted. “And some of them are expected to continue working even after they qualify for Social Security benefits.”
Economics professor at the New School for Social Research, Teresa Ghilarducci, estimates that Social Security replaces 40 to 50 percent of a person’s pre-retirement income. People generally need about 80 percent of pre-retirement income to live after they stop working.
Those in the bottom 50 percent of the income distribution, meaning they earn less than $40,000 a year, have no retirement savings. Those in the middle 40 percent of income distribution have a median amount of $60,000 saved. Workers in the top 10 percent of income distribution have a median amount of $200,000 saved. Even this is not enough savings to get by on, for the most part. Ghilarducci estimates that a typical professional must acquire “over $1 million or 2” to retire comfortably.
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