Pushing for Retirement

Americans are now healthier and live longer. These are not the reasons, however, as to why their retirement gets delayed. A longer career could be the result of a number of reasons. A research paper authored by Courtney Coile of Wellesley College points out that participation in the labor force went up over the last 20 years for both sexes. Coile is an economics professor working out of Wellesley, Massachusetts. The National Bureau of Economic Research distributed the report.

Women and education

Education tops the list when it comes to reasons for late retirement. More educated people start earning much later in life and thus retire later as well. Their work is also physically much lesser demanding. Another factor is the inclusion of women in the workforce. Research has proven that spouses tend to retire at the same time. It means husbands will retire with their wives even though the former is older than the latter. Women themselves work for a longer period of time as they feel the requirement to boost savings. Many also compensate the time they had taken off to care for their children or their other loved ones. Many just like what they do to make money and are not ready to retire.

Defined contribution plans

Another important factor was the shift to 401(k) and other defined contribution plans. The retirement incomes of Americans once came from the defined benefit plans like pensions. Companies started to implement the defined contributions plans like 401(k) from the latter part of the 1970s. There are ample differences between the two plans. Unlike pensions, the majority of the money came from employees themselves. Not all companies provide such schemes. The shift towards working longer stems from the fact that pension benefits are better the longer a person works. This is applicable only until the retirement age. Cross that threshold, and not much financial incentive can be had after that. Compared to its predecessor, nothing age-specific can be said about the defined contribution plans. The scheme gets more money the longer the person works.

The reform in Social Security scheme is another reason as to why people now work longer. The age of full retirement for any person reaching 62 years of age in 2018 is 66 plus four months. The age rises by two months for every year. For two-month increase, the retirement gets pushed off by one extra month. It follows that Social Security Administration enjoys more information on how to calculate the full retirement age.

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