Living well Your Health & Wellness

Many more people over 65 working in order to manage financially

Written by Diane Archer

Suzanne Woolley reports for Bloomberg News that 20 percent of people who reach 65 are working rather than retiring in order to manage financially. That’s double the proportion of Americans who worked past 65 just 35 years ago.

Between the high cost of health care, small savings, and the demise of guaranteed pensions in retirement, many Americans need to work past 65. The last time 20 percent of Americans over 65 were still working was in the late 1960’s.

To be clear, people working past age 65 tend to be college-educated. Their inflation-adjusted average income is $78,000 today, up from $48,000 in 1985. Their income has increased 63 percent, compared with workers under 65, whose average annual income has increased 38 percent to $48,000.

The people who most need more income in retirement are generally less educated and unable to find jobs.

Accepted wisdom is that people need about 80 percent of their pre-retirement income to make do. Social Security benefits are estimated to replace only about 40 percent of that pre-retirement income. And, the typical worker on the bottom half of the income scale, with income below $40,000, has no retirement savings, excluding the value of any property they have.

People earning between $40,000 and $115,000 a year pre-retirement typically have about $60,000 in savings. The top ten percent of income earners with incomes above $115,000 typically have savings of $200,000, not enough. By one estimate, a typical college-educated professional needs to save between $1 and $2 million today “to retire fairly comfortably.”

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1 Comment

  • …many who make less than 40,000$ (particularly those in low paying service sector jobs) often have little to nothing to put away in savings. The two main culprits, healthcare, and housing where costs in many areas of the nation have been skyrocketing. Making 20 – 25K in the Bay Area or a city like Portland, Seattle, New York, Chicago, or Austin where housing prices are high, often causes rent alone to be more than 50% of ones monthly income. Yes even in Seattle which raised the minimum wage in the city to 15$ as average rent for a 1 BR flat in the city can be as much as 1,600$ or more making rant take almost a 60% bite out of one’s monthly paycheque. The same for Portland to the south which is incrementally raising the minimum wage over the next couple years and is currently at 12$ an hour which makes average rent of 1,500$ for a 1 BR unit 72% of monthly gross.

    In most of these cities housing for those on a low or fixed income is at a critical shortage often due to gentrification and the push for more upscale development in the central core and surrounding neighbourhoods. This often pushed low wage earners to the outskirts, making commutes long and often cases requiring a car (another big expense) as transit generally becomes more sparse and infrequent the further out from the city centre you are. Even in Portland ,OR, which is hailed for its transit system, there are areas in the burbs where service is extremely limited, like no late evening hours or even no service on weekends. Even so, rents in the outlying areas of the city are increasing as well in some cases by 25% or more (one complex owner looked to increase rents by 350$ and threatened residents with eviction if they didn’t like it [Portland has a chronic issue with what are known as “no cause evictions”]).

    As to healthcare costs, if you make over a set amount per month, yo do not qualify for the state’s Medicaid funded health plan. That means you are on your own dealing with with a usually poor bare bones one offered by your employer that has high deductibles, fees, copays with usually a laundry list of conditions and services not covered, or having to deal with the the high cost of a private insurance provider as health coverage is mandatory in the US.

    So letsee, housing takes more than half our income (before taxes and other deductions), a car is required to get to work (which means insurance and other associated costs on top of monthly payments), and you need some form of healthcare coverage as it is mandated by the government but you make more than the cap to qualify for public funded healthcare. All on say 12$ – 13$ $ an hour. This is part of why so many people end up working multiple jobs (as well as many jobs today are part time so employers can get off the hook for offering benefits) just to make ends meet.

    So much for saving for retirement.

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