Is 70 the new 65?
October 19, 2010
When it comes to retirement, 70 is quickly becoming the new 65, according to the latest "Unretirement Index" by Sun Financial Inc., a global financial services company.
As the economy stumbles along towards recovery, the latest index survey found that 80 percent of Americans think they'll need at least three years to rebuild their retirement savings, and more than half expect to work at least three years longer than they originally planned.
Today just as many Americans expect to retire at 70 as those who plan to retire at 65, and they're not staying on the job for the fun of it. Two years ago, the most cited reason for working past traditional retirement age was "to stay mentally engaged," Sun Financial says. Now the most popular reason is "to earn enough money to live well."
Sun Life created the index at the onset of the recession to learn why people were choosing to continue to work full- or part-time past retirement age. The latest results show deepening pessimism about their own financial situations and the general economy.
Most Americans cut spending and debt
Fewer Americans expect to receive the same level of government retirement and health care benefits as today's retirees, with 14 percent very confident in Social Security, down from 22 percent two years ago, and 16 percent very confident in Medicare, down from 20 percent two years ago. Only 42 percent are very confident they will be able to cover basic living expenses in retirement, and almost 20 percent think they will never fully recover from their financial losses.
To cope with financial setbacks, almost three-quarters of respondents, 71 percent, are cutting their spending this year, and 66 percent are reducing their debt. Targets for reduced spending include entertainment, eating out, holiday shopping and travel. Seventy-two percent are postponing big purchases, like cars or homes, and 29 percent report delaying a routine or elective medical procedure.
Such cost-cutting doesn't bode well for the economy, of which 70 percent is fueled by consumer spending. Until the jobs outlook improves and consumers start spending more, interest rates on savings accounts, money market accounts and CDs will likely remain at the miniscule levels seen today.