When retiring isn’t an option: 'I couldn't retire if I wanted to' By Lisa Scherzer

People just aren't prepared. According to a study on retirement confidence by the Employee Benefit Research Institute published last week, less than half of those surveyed have tried to calculate how much money they'll need in retirement, and 39% simply guess rather than doing a systematic analysis.

And it gets worse. Last month the New York Federal Reserve released a report that found that people over 50 are carrying more debt than they had in the past. It found that the debt held by younger borrowers dropped slightly from 2003 to 2015, whereas debt held by people between ages 50 and 80 spiked by 60% over the same period.
What types of borrowing play the largest role in the observed surge in debt at older ages?
The average 65-year-old had $27,259 in mortgage debt (including a home equity line of credit, or HELOC) in 2003. By 2015, that figure climbed 47% to $40,000, according to NY Fed data. The same age group carried $2,973 in auto loan debt in 2003, and $3,830 in 2015 – a 29% increase. Credit card debt levels remained around the same for 60- and 65-year-olds – and even dropped moderately – between 2003 and 2015. Student loan debt increased among 65-year-olds over the same period.
Yahoo Finance took an informal survey of retirees and those close to retirement age in New York recently to get a sense of how they view their retirement prospects. Some people we spoke with were in comfortable financial situations, while others (who you can hear from in the video above) planned to work as long as they possibly could. Whether because of considerable mortgage debt or because they’ve exhausted their savings to pay for their children’s college education, retirement isn’t on the near horizon.

Michael Barry, a self-employed farmer on Long Island, says he plans on working as long as he can. “I love what I'm doing. So I really enjoy it. And as long as I'm healthy. I intend to continue,” Barry, 65, says. “The other reason is that I couldn't retire if I wanted to, financially.”

Debt – especially mortgage debt, often the most costly monthly expense – can stand as an obstacle between retiring and having to continue working. Indeed, according to the Fed’s 2014 Survey of Household Economics and Decision Making, about 31% of non-retiree respondents have no retirement savings or pension.

It’s important to note that debt isn’t always a negative, even for near-retirees. Most homeowners benefit from a mortgage interest deduction. But the value of the deduction may drop when you retire. You might be paying far less interest on your loan, which means a far smaller mortgage interest deduction. (Here’s a more detailed look at the pros and cons of retiring with debt.)

“We try to help our clients understand the math, but at the end of the day, the qualitative aspects tend to be more important to people. We’re not worried about debt if it’s done right,” says Brett Horowitz, CFP and wealth manager at Evensky & Katz in Coral Gables, Fla.
Culled from yahoo finance

Retiring After 65 May Help People Live Longer-By Ann Lukits

More longevity benefits for retirees between 66 and 72

 

Thinkstock

Retiring after age 65 may help people live longer, says a study published online in the Journal of Epidemiology & Community Health. The risk of dying from any cause over the study period was 11% lower among people who delayed retirement for one year—until age 66—and fell further among people who retired between the ages of 66 and 72, the study found.

Even workers who retired for health reasons had a lower risk of dying, compared with those leaving work at 65.

The benefits of remaining in the workforce occurred irrespective of gender, lifestyle, education, income and occupation, the analysis showed.

Postponing retirement may delay the natural age-related decline in physical, cognitive and mental functioning, reducing the risk of chronic illness, the study suggests. Mandatory retirement in the U.S. was abolished in 1986 except in certain professions, such as airline pilots and judges.

Researchers at Oregon State University analyzed data from 2,956 people who were employed at the start of a larger study in 1992 and fully retired at its conclusion in 2010. Retirement age ranged from 55 to 77 years old. Of the subjects, 33% retired at age 66 or older, 12% at age 65 and 55% before 65. Just over a third cited health reasons for retiring.

Over approximately 18 years of follow-up, 12.1% of healthy and 25.6% of unhealthy retirees died. Compared with retiring at age 65, workers who retired in good health at age 67 had a 21% lower risk of dying. By age 70, the risk was 44% lower, and at age 72 it was 56% lower.

For workers with health issues, the risk of dying was 9% lower if they retired at age 66, 17% lower at 67, 38% lower at 70 and 48% lower at 72.

Caveat: The analysis only included subjects born between 1931 and 1941.

Association of retirement age with mortality: a population-based longitudinal study among older adults in the USA

Culled from The Wall Street Journal

There's rare good news on the retirement front - By Suzanne Woolley

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Close-up of a person's hand putting a coin into a piggy bank

 

Bloomberg

 

Bloomberg

Retirement savers are upping their game: A record 13.6 percent of 401(k) participants raised their savings rate during the first quarter this year. Overall, employee contributions, combined with employer matching funds and profit sharing, rose 12.7 percent to reach another record.
Not only are savings rates up, but more people are saving in both a 401(k) and an Individual Retirement Account. That’s according to Fidelity Investments’ first-quarter analysis of the accounts of 13.9 million retirement savers, with assets of $1.2 trillion, in the employer savings plans it administers.

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Fidelity isn't unique in seeing a rise in saving. A recent Gallup poll found that two out of three Americans would rather save than spend. The gap between the two camps is at its widest since 2001, when Gallup first asked the question, the report found.
Fidelity's universe of double-barreled savers is up 7 percent from a year ago, to 1.3 million people, with an average contribution of $11,600, up $300.

The accounts of employees who've been in their company's 401(k) plan for a decade are looking particularly good. The average balance is $240,700, up 2 percent from a year ago. It's hardly a great return, but it beats a money market and beats back inflation.

For younger, still long-term, savers between the ages of 35 and 39, balances are also decent—an average of $131,000. That's encouraging, said Katie Taylor, a director of thought leadership focused on workplace retirement plans at Fidelity. The company's rule of thumb is that those in their late thirties need two to three times their salary in a 401(k). "For many people, $131,000 could be right in that wheelhouse,” said Taylor.

What the fund giant didn't find: a lot of portfolio shuffling in the wake of January's volatility. The percent of exchanges—when someone shifts allocations within a 401(k)—rose to 4.8 percent, from 4.5 percent. The average equity allocation inched down to 52.6 percent, from 53.6 percent.

That kind of inertia can be good if a saver has the right asset allocation. It bodes well for millennials, many of whom are auto-enrolled into target-date funds in 401(k) plans. Sixty-three percent of millennials in plans tracked by Fidelity are in target-date funds.

The not-so-good first-quarter news is that while the S&P 500 index was close to flat, year over year, the average 401(k) account balance fell an average 5 percent. That led to an average of $87,300 for 401(k)s, down from $91,800 a year ago. The average IRA balance slid as well, to $89,300, from $94,100 in 2015's first quarter.

The performance isn't as bad as it seems, however. Some of the 5 percent drop is simply because of 400,000 new 401(k) accounts at Fidelity, said Taylor: "If those people are just starting out or were just re-enrolled, and the balance is zero or is very low, it can affect the average."
Culled from Bloomberg.com