Planning to Retire

Dara Torres, 41, became the oldest swimming medalist in Olympic history on Sunday. She has twice retired from swimming and has a 2-year-old daughter, but keeps returning to the sport to add to her medal collection.

"The water doesn't really know what age you are, so it doesn't really matter when you hit the water what age you are," Torres said after anchoring the U.S. team in the 4x100 meter freestyle relay, Reuters reports. "I'm hoping that my age paves the way for other athletes, who maybe think they are too old to do something, to get back in or continue in the sport."

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No one is quite sure how much of their current salary employees should aim to replace in retirement. Recent estimates have ranged from 65 to 85 percent of preretirement income (Government Accountability Office) to an astonishing 126 percent of final pay (Hewitt Associates).

The latest study entering the fray calculates that most people should aim to replace 77 to 94 percent of their preretirement income, according to Georgia State University and Aon Consulting Worldwide, an arm of the insurance giant Aon. The numbers are less than 100 percent of income because expenses often drop in retirement. "This is primarily due to the following factors: Income taxes go down after retirement; Social Security taxes end completely; Social Security benefits are partially or fully tax free; and saving for retirement is no longer needed," says Cecil Hemingway, U.S. retirement practice leader with Aon Consulting.

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In Social Security history, the age at which a worker can claim full benefits has increased only once—in 1983. The rise from age 65 to 67 was phased in over more than 20 years. As things currently stand, those born in 1937 or earlier get their full due at age 65, everyone born in 1960 or later can't claim full benefits until 67, and employees between those years can find their full retirement age here.

The American Academy of Actuaries says it's time to raise the retirement age again to keep up with ever increasing life expectancies. In 1940, men who reached age 65 typically lived 12 years in retirement and women just over 13 years. In 2007, those ranges were almost 17 years and 19 years, respectively. And Social Security Administration actuaries predict that life expectancy at age 65 could further increase to almost 19 years for men and 21 years for women by 2040—which is seven to eight more years of retirement that will need to be financed.

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At first, retirement might be like a vacation. No alarms clocks, no commuting, no meetings or bosses. But some people who retire actually miss the office and want to return to work at the same company. No so fast! About half of companies have rules in place that don't allow you to waltz back over to your old desk and reclaim your paycheck and benefits after you've officially retired.

A new survey of more than 140 midsize and large employers by the human resources consulting firm Hewitt Associates found that 45 percent of the companies surveyed have restrictions in place that limit the ability to rehire previously retired employees. Common policies include a minimum period of absence (typically six months or less) before an employee can be rehired (42 percent), a limit on the number of hours a retired employee can be re-employed (31 percent), or allowing retirees to return to work only as employees of an outside contractor or leasing agency (29 percent).

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