Delaying retirement by a year or two is one of the most straightforward ways to make up for a lack of retirement savings. Working longer packs the double punch of giving your more time to save, while reducing the number of years your savings must last. But simply pushing back your retirement date won’t be an option for everyone. Here are five reasons you may not be able to delay retirement.
Increasing unemployment. About 2.4 million people age 50 and older were unemployed in 2010. The unemployment rate for individuals age 50 to 61 was 8.3 percent for men and 6.5 percent for women, more than double their 3.2 percent and 3 percent respective unemployment rates in 2007, according to a new Urban Institute analysis of Bureau of Labor Statistics data.
Underemployment. The official unemployment rate fails to count those who have given up on finding a job and those who have accepted part time work because they couldn’t find a full time job. The Urban Institute estimates that the underemployment rate is 12.3 percent for men and 12.1 percent for women between ages 50 and 61. Some people who can’t find work eventually give up and start calling themselves retired.
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Not enough education. Highly educated workers are more likely to be able to delay retirement. The unemployment rate for male college graduates age 50 to 61 was 5.2 percent in 2010, compared to 10.1 percent for high school graduates and 14.2 percent for those who did not complete high school. Among women the same age, college graduates had a 4.5 percent unemployment rate, far lower than the 7.7 percent of high school graduates and 10.8 percent of women without a high school diploma who were unemployed.
Difficulty finding jobs. Older workers who are laid off seem to have an especially difficult time finding work. More than half (53.5 percent) of unemployed individuals age 50 to 61 were out of work for over 6 months in 2010, up from 24.8 percent in 2007, the Urban Institute found. And nearly a third (31 percent) of unemployed people in this age range have been looking for work for over a year. The average duration of unemployment for people age 55 and older was 45.5 weeks in February 2011, according to an AARP Public Policy Institute report, far longer than the 35.2 weeks it took the typical younger person to find a job last month.
More competition for jobs. Record numbers of people are continuing to work during the traditional retirement years. Over 40 percent of Americans age 55 and older participated in the labor force in 2010, up from just over 29 percent in 1993, according to an Employee Benefit Research Institute analysis of Census Bureau data. Retirees who haven’t saved enough or who enjoy their work are increasingly staying in the workforce beyond the Social Security eligibility age. Some 27 percent of men age 62 and older now work, up from 25.8 percent in 2007, the Urban Institute found. The employment rate for older women increased from 17 percent to 18.4 percent during the same time period. “The recent surge is likely related to growing concerns about retirement security,” write Richard Johnson and Janice Park, the authors of the Urban Institute report.
It doesn’t help that many of those who hold on to their jobs after age 50 are being paid less. Earnings for those age 50 to 61 fell 3.5 percent for men and 2.2 percent for women from 2009 to 2010.