By Walter H. Zultowski, Ph.D
In the last six years, since the onset of the “Great Recession,” it has been common to read about the trend of Americans continuing to work after our country’s traditional retirement age of 65. This was understandable given that many retirees and pre-retirees saw their retirement nest eggs decimated during this economic downturn.
Fortunately, with the improving economy and stock market, we are now reading about how most Americans’ retirement portfolios have recovered the ground lost during the Great Recession, and may be back to their pre-recession levels. However, their attitudes about retirement and the need to continue working haven’t returned to what they were. My conclusion is that Americans were permanently affected by the Great Recession, and we’re seeing a permanent change in their views regarding work and retirement.
“With Americans healthier than ever before, life insurance is more affordable than it’s ever been.”
Why might this be the case? There are a few possible explanations:
- The Great Recession changed the retirement views of many Americans, and they realize that even with an improving economy and stock market, they may not be close to where they need to be to fund their retirement. To this point, the AP-NORC report mentions that nearly 40 percent of Americans ages 50 and older report having less than $100,000 in retirement savings, not including pensions or the value of their primary residences.1
- With increasingly unstable global markets, market volatility seems to be a “new normal” in our financial world. Many Americans today are likely concerned that there is no way to prevent a repeat of the Great Recession controlling global events and market volatility. They increasingly understand that portfolio diversification does not provide a total safeguard. The one thing that is under their control, however, is their ability to continue to generate income by working past age 65. The AP-NORC study notes that while about half of Americans age 50 or older who are secure with their retirement savings will stop working, only 30 percent of those anxious about their retirement savings will do the same.1
- Finally, more and more Americans are living to older ages, and many in their 50s and 60s are experiencing this firsthand with their parents. They are also witnessing how long-term care needs can deplete a retirement nest egg. With Americans healthier than ever before, they are unaware of how long their retirement resources will last. Couple this with concerns about the long-term viability of Social Security and Medicare, and it makes the desire to continue earning income during their retirement years totally understandable.
As views of retirement security are changing, views on the role of life insurance as income protection during working years after age 50 are changing too. Simply put, if many continue working into their retirement years because they need the income, then they need to consider protecting this income for the financial security of their spouse and the younger and older generations that may depend on them. The good news is that with Americans being healthier than ever before, life insurance for Americans is also more affordable than it’s ever been.
1The Associated Press and NORC. 2013. Working Longer; Older Americans’ Attitudes on Work and Retirement.