File image of Christopher Plummer File image of Christopher Plummer
New York - One way to prepare for retirement is to save.
Another way: Don’t retire.
It’s surprisingly common to put very little aside and
hope you never need to hang up your cleats for good. Among investors under age
35, more than four-fifths (83 percent) say they plan to work during retirement,
according to a survey released this month by Merrill Edge. It’s not just
millennials: 79 percent of Generation X and 64 percent of baby boomers who are
still working agree.
And how many retirees surveyed actually have some sort of
job?
That would be 17 percent.
From a financial perspective, working into your 70s or
80s can be a great idea. It’s also completely unrealistic for many workers,
especially if they want to stick to their chosen profession. It’s not just
blue-collar workers with physically demanding jobs who can’t work forever. Even
office workers need to prepare for the possibility that their careers will have
a natural shelf life.
“As white-collar workers, we tend to believe we’re immune
to the factors that cause blue-collar workers to retire early,” Boston College
economist Geoffrey Sanzenbacher said at a recent conference. His
research, done with colleagues at Boston College's Centre for Retirement
Research, shows how “age-related decline” hits even well-educated professionals.
Read also: Early retirement puts your financial future at risk
As we get older, not all our skills decline at the same
rate. And in some ways, we get better. Older workers tend to be more
knowledgeable than younger workers, research has found. Though it can take
longer for older people to learn new skills or process new information, they
are often much better at tasks they’ve practiced extensively. Physical ability
varies, too. An older worker who can’t balance on a roof or deliver a
dishwasher might have no trouble holding on to a broom.
Taking these differences into account, the Centre for
Retirement Research used US government data to rate each of 954 occupations on
the likelihood that its required skills will decline with age. The result was a
“susceptibility index,” with compensation and benefits managers ranking lowest
and dancers at the top.
The researchers then looked at data on when people
actually retire. Controlling for other factors, they found that people in
occupations that ranked higher on the susceptibility index were indeed likelier
to retire early. A white-collar worker ranking higher than 75 percent of
the group was 7.5 percent more likely to call it quits before age 65 than a
worker in the 25th percentile.
Why are some white-collar jobs more susceptible than
others? The answer lies largely in the extent to which they require different
types of intelligence.
intelligence
“Fluid intelligence,” your ability to process new
information and situations, tends to decline with age. Meanwhile, “crystallised
intelligence,” your knowledge of facts and how to perform particular tasks,
generally increases through your 50s and 60s, researchers have found, with
little decline after that. That’s one reason designers and stock traders rank
higher, or are more susceptible to decline, than, say, teachers and academics.
“The notion that all white-collar workers can work
longer, or that all blue-collar workers cannot, is too simplistic,” the study’s
authors concluded. For example, photography, a job that can require lots of
fluid intelligence, can be more susceptible to age-related decline than jobs as
cooks or cleaners, which depend on physical and cognitive skills that last late
into life.
Read also: Why you need to rethink your retirement plan
Not all the news about aging is bleak. While the health
of one segment of the US population has recently gotten worse, Americans on the
whole are living longer, healthier lives than ever. A record number are working
past age 65, and the share of seniors with dementia has plunged, from 11.6
percent in 2000 to 8.8 percent in 2012.
Still, even as some talk about raising the Social
Security retirement age, we can’t all work as long as we’d like. Over the
course of your career, you might want to move away from jobs requiring physical
strength and quick thinking, and toward positions that use the knowledge and
wisdom you’ve accumulated.
Exercise and good nutrition can help you stay productive
longer. And you might want to try saving more, if at all possible. The IRS
allows people 50 and older to save an extra $1,000 in individual retirement
accounts and an extra $6 000 in 401(k)-style plans. These “catch-up”
contributions may come in handy later on.
