“There has never been a better time to not retire. Have you considered not retiring?” That’s what many media outlets and economic news sources are reporting on regarding the retirement economy. You’ll find articles and features on people at 70, still working away, all smiles. While many don't retire because they find a post-career lifestyle difficult to adapt to, Baby Boomers, however, have a more fixed dilemma: money.
The push for delayed retirement isn’t being perpetrated for the exclusive benefit of insurers but because it is generally better for everyone. The downside is it is at the expense of the Boomer generation’s time, or Golden Years. While the most recent recession certainly impacted retirement plans and packages in the last decade, inflation has kept up its own stride.
Consequently, the exit plans as of late haven’t been looking too enticing. Considering the welfare and insurance economy as a whole, it doesn’t take an economist to know that when a generation that is defined by a historic population spike retires all at once and begin collecting from Social Security, it throws things out of balance.
Millennials and Gen X’ers are taking longer to have kids than previous generations, so there are significantly fewer individuals plugged into the economy and contributing to the welfare system. Incidentally, we are living in the midst of the smallest age gap in recent history (as exemplified by the OECD below). To buffer this gap, many insurers and providers offer incentivized plans to delay retirement. Should Boomers hold off on retirement until around 68, they stand to gain better collection rates when they do retire.
As time goes by, however, there are fewer and fewer Social Security loopholes for retirees to take advantage of. While many point to improved health and quality of life as a major reason seniors are holding off on retiring, it is quite plain to see the real problem is money. Economic stagnation hits businesses first and foremost and reduced profit margins are often buffered by financing departments reducing pension rates and deposits.
This decline works in direct opposition to what is known as "lifestyle creep". This "creep" is when things that are considered luxury items, or non-essentials in life, become a norm as one gets older and income proportionally increases. As a consequence, it becomes increasingly difficult to maintain an increasing quality of lifestyle, let alone maintaining a standardized quality of life.
This of course is all very general. No two economic situations are the same. Same goes for health and genetics and that is the real measure to be considered. Because while a lot of these plans and policies are pretty black and white, one must seriously consider what their projected timeline of collection is going to be.
While it is safe (for now) to say that individuals are always going to get a better rate should they delay collection, it comes down to if it's really worth the time. Back to generalities, because of the complex nature of economics (especially the tumultuous state of Social Security) one should be up-to-date on financial advice and reporting so they can make the most prudent decision when it comes to timing.
It is always advisable to consult fiduciaries and other experts who do not have an invested interest to look at individual economic situations to see what the best options and plans of action are available.