Jeffrey D. Allred, Deseret News
Two years ago, Veldon Sorensen was getting ready to move to Fresno, California. The 62-year-old had no plans to retire anytime soon, having moved seven times during his career — including stints in Canada and Germany — as a researcher for Bayer CropScience. But when he looked at the appraisal on his Salt Lake City home and the fact that the Fresno housing market was still on the decline, he couldn’t see how the move made financial sense. So he took a severance package and an early retirement, uncertain of what the future would hold.
“It was a little bit scary,” Sorensen said. “We didn’t know what we were going to do when my severance ran out.”
The Sorensens are not alone among those in the Baby Boomer generation whose retirement plans were turned upside down by the recession and collapse of the housing market. Many Americans are finding that economic realities are making it impossible for them to contemplate retirement on the timeline they had hoped. From the impact of the recession on savings to a fear of rising health care costs, a number of factors are forcing older Americans to reconsider their plans to leave the workforce.
“A number of people are finding they just have not saved enough,” said Sharla Jessop, a certified financial planner at Smedley Financial Services in Salt Lake City. “We see them at age 65 thinking that, but we also see people in their late 50s and early 60s, and they have this desire to retire. And they’re not going to be able to. They’re not going to have the funds.”
The number of those delaying retirement is only increasing. A report released earlier this year from The Conference Board, a nonprofit group that researches consumer economic trends, found that among workers between the ages of 45 and 60, the number of those who said they were going to delay retirement jumped dramatically from 42 percent in 2010 to 62 percent in 2012.
In fact, about 18.5 percent of Americans over the age of 65 were working last year, according to the Bureau of Labor Statistics, the highest rate in history. And while the expected retirement age keeps rising, according to a recent Gallup poll, Americans are working longer than ever before: an estimated 7 percent of Americans 75 or older still have jobs. For a generation of workers, retirement often still looks like a distant dream.
As retirement savings have moved from pension plans with defined payouts to individual contributions to those same accounts, Americans have been failing to save enough over the course of their lifetimes for a comfortable retirement, according to a number of studies.
One study conducted this year by Deloitte, a large financial services firm, found that a majority of Americans — 58 percent — do not have a formal retirement savings and income plan in place. Even those who have saved often haven't accumulated enough.
The Employee Benefit Research Institute’s yearly Retirement Confidence Survey found that the percentage of workers confident about having enough money for a comfortable retirement is “essentially unchanged” from the record lows observed in 2011, with 28 percent of workers "not at all confident" they have saved enough and 21 percent saying they are "not too confident."
The same survey found one of the reasons people aren’t saving is that they’re simply trying to survive financially. When asked what the most pressing financial issue facing Americans today is, a much larger chunk identified job uncertainty and making ends meet as more important than saving or planning for retirement.
Those who are unable to save much are often in a dramatically worse situation than their counterparts who have savings.