Most people dream of retiring someday, even if you love your job. Many of us daydream about what it will be like to live out your golden years without financial worry and surrounded by family and friends. However, many Americans are finding themselves working in their 70s (and not because they love their jobs).
Why Are People Working in Their 70s?
Over the past two decades, the percentage of individuals working in their 70s have increased from 10 percent to 15 percent. Because people are living longer, many of them are outliving their Social Security and retirement savings. This forces them to go back to work or continue to be in the workforce longer than previous generations.
The increase in the number of folks working during their golden years can also be attributed to the types of jobs available as well. There are not many labor-intensive jobs on the market right now, making senior citizens able to return to work than in recent history.
“Which matters more [the choice to keep working or the necessity to do so] depends on what your history up until that point has been in the type of work you’re doing,” said Katharine Abraham, an economics professor.
A Perk for Employers
Employers aren’t totally losing out on this situation. As it turns out, older employees are more likely to be happy in the workplace and more skilled overall. They also have stronger problem-solving skills than their younger counterparts.
Individuals working more physically demanding jobs may be looking forward to retirement. Many of those continuing to work those careers in their old age are doing so out of necessity. But, if you prepare for retirement well enough, you won’t have to.
How to Better Prepare for Retirement
Education and preparation are key to not joining the ranks of those working in their 70s. This 10-point list gives you a few things to consider to better prepare for your golden years.
- Build up emergency savings immediately. Having emergency savings will keep you from racking up debt as well as give you the ability to begin saving for retirement.
- Budget for your retirement. Think about how much money you’ll need to retire, where you’ll live, and what kinds of activities you’ll want to do. Then construct a budget for your golden years.
- Consider your health insurance options. Without work, health insurance can be expensive. Some pension plans will include health insurance, but not all will. Find out what your options are early on so you can budget for it.
- Educate yourself about how retirement income is taxed. Social security and IRA distributions are taxed. You need to learn about how much money you’ll be paying in taxes to construct a budget correctly.
- Draw up an income timeline for retirement. After figuring out your budget, draw up a timeline for your income. How much will you need each year? How long will it be until you retire? What if you outlive the funds you have set up?
- Use a retirement calculator to lay out possibilities (and a Social Security calculator). Check out an online retirement calculator and determine different possibilities. You can also figure out what your social security income may be with one of the IRS calculators.
- Make an investment plan and read up on the best retirement investments. Maybe even hire someone to help you with these investments. Determine your risk tolerance and figure out what investments will help you later in life.
- Consider hiring a retirement planner. Be sure to interview a few. Retirement planners can be great in helping you get set up and manage your money during retirement. Just be sure you get the right planner for your needs.
- Learn how to earn more from your 401(K). If you can roll your 401(K) over into an IRA and you’re nearing 60, it may be in your best interest to transfer the funds.
- Analyze the different pension distribution options available to you. Any decisions you make with your pensions cannot be changed. Be sure you know all of your options before you choose.
These 10 things can help set you up for a retirement where you actually get to retire. With more and more Americans working well into their 70s, it is important to be proactive in your financial planning for your later years.
Readers, what do you think about the increase of Americans working in their 70s?