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USA Article on Early Retirement
Old 07-10-2006, 05:47 AM   #1
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USA Article on Early Retirement

Many Americans retire years before they want to
By Sandra Block and Stephanie Armour, USA TODAY

The stark reality is that most of today's middle-age workers who want to continue working after 60 or even 65 will need to find a new source of income. While nearly half of baby boomers expect to work past 65, only 13% of current retirees surveyed this year by consulting firm McKinsey & Co. actually worked until that age. Forty percent of current retirees were forced to stop working earlier than they had planned, the survey found. The average age when current retirees left the workforce: 59.

...As of 2005, just 60% of 60-year-olds, 32% of 65-year-olds and 19% of 70-year-olds were employed, according to the Bureau of Labor Statistics. Current retirees cited two primary reasons for quitting sooner than planned:

•Illness. About 47% of current retirees who retired earlier than planned were forced to stop working because of health problems, according to McKinsey & Co. Less-affluent retirees were far more likely to cite health problems as the reason for forced retirement than higher-income workers were, the study found. "At lower-income levels, many of these people have jobs that require physical labor," says David Hunt, a senior partner at McKinsey. As they age, some are no longer able to handle the demands of their jobs, he says.

•Unemployment. Forty-four percent of current retirees who retired earlier than planned blamed job loss or downsizing. Unemployment was the most frequently cited reason for early retirement among retirees with more than $250,000 in investments, the McKinsey study found. "Even at reasonably high levels of pay, if you're laid off when you're 53 or 54, it's much harder to get retrained and back in the workforce," Hunt says.

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Re: USA Article on Early Retirement
Old 07-10-2006, 07:16 AM   #2
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Re: USA Article on Early Retirement

I think this was my motivation to retire. IOW - Leave before they pull the rug out from under you.
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Re: USA Article on Early Retirement
Old 07-10-2006, 07:32 AM   #3
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Re: USA Article on Early Retirement

There's a lot to be said for the old "You can't fire me, I quit!" option. Plans to be gone before the RIFs started was one of the factors that motivated me toward ER (along with being inherently lazy). Worked out great as company ownership changed twice in the year I retired and I felt virtually bulletproof through all the turmoil going on around me.

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Re: USA Article on Early Retirement
Old 07-10-2006, 08:28 AM   #4
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Re: USA Article on Early Retirement

Interesting article.

I too find it hard to believe Boomers will be able to find a decent job after they retire or are laid off in their late 50s. Maybe in 10-15 years...but not now. They trend in business is still "do more with less" and that means less people doing more work. The new kid out of school is cheaper than the old fart with 30 years of service. Since costs are the main motivator on price control within a manufacturing company, management will do everything they can to cut or avoid costs. This includes pushing out older workers at high salaries in favor of younger and cheaper workers. It also means maybe not replacing people when they leave so those left behind have to suck it up and take on more and more work.

The fear of losing a job at the end of one's career is a real and everpresent one. The global economy has forced many companies to lower costs more and more each year. The cost savings for manufacturing companies comes from cutting manufacturing overhead costs which = people for the most part. Benefit costs are also being cut along with the "goodies" that used to come with the job...birthday meal tickets, company anniversary bonus, stock options, medical insurance premium employee share costs, defined benefit plans, 401k match percentages, etc.

It will be very intersting to see where the unretireable boomers will be getting the jobs they clearly must have to continue to support themselves. Especially in light of all the articles stating how unprepared most are with such small 401k balances ($180k) and little after tax money available. A job will be a requirement. The problem will be what work will be available and how is going to hire these people?
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Re: USA Article on Early Retirement
Old 07-10-2006, 08:44 AM   #5
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Re: USA Article on Early Retirement

I'd like to see samples of the 4000 resumes they sent out.

I'm betting the older workers had a longer job seeking period because their salary requirements were higher, and if they included salary requirements on the resumes, that may be why fewer were called in for jobs.

I do love the corporate idea that you can junk an experienced salesman and pick up some guy out of college for "half price". Yep, and he'll have no contacts, no network, and no sales. Good idea.

Having been involved in quite a few hiring processes, I dont think I ever saw overt age discrimination in head to head hiring. I did see a lot of programs that hire new collect graduates and a lot of college recruiting. I did see that when we hired a young guy he tended to recommend a lot of his buddies for jobs, which I didnt see older folks do. I did see annual performance review standards that favored younger people developing new skills vs older employees with solid but static skills.

I'm sure age discrimination is out there. It may even be very prevalent in smaller businesses today and I havent worked in a small biz for 15 year. But I'm not sure the stats from this article define it or size it very well.
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Re: USA Article on Early Retirement
Old 07-10-2006, 09:16 AM   #6
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Re: USA Article on Early Retirement

Surreal - Great article, thanks for posting it!

SteveR - Great comments!

I'll just add that, for me, the greatest reward for LBYM and investing over the years was peace of mind during my last few working years when my company was downsizing and I, in my fifties, was a likely victim.* Instead of fretting at each reorganization announcement, wondering if I'd still be on the org chart, I was able to just relax and wait.* When they finally got to me, I received extended active employee medical benefits and a cash severance on top of the normal retirement benefits.* *

My heart goes out to folks in their 50's who desperately need to keep their job right up to 65.* It's going to be tough.* Replacement jobs generally pay less, probably much less.* And, of course, medical coverage will be an expensive and painful issue.

I know I'm preaching to the choir here, but I'll say it anyway. Getting started young at funding IRA's, 401K's, 403B's, etc., is so important and so worth it!* Not for the toys and goodies you'll be able to afford in retirement, but for the peace of mind you'll have later in life when age has made you less resilent to career mishaps.

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