How Long Will You Work?

Recent surveys show that younger Americans believe they will work past normal retirement age, which could become reality given the increasing amount of “retired” Americans who continue to work. But life has a way of altering the best-laid plans, so it’s important to establish a “what-if” strategy that addresses a shorter work life and longer retirement than you may plan.

Intentions and Reality

With fewer pensions and inadequate retirement account balances, many older Americans not only work past normal retirement age, but hope to keep working indefinitely. According to the Bureau of Labor Statistics (BLS), the labor force participation rate is expected to increase fastest for people ages 65 and older through 2024.

While older Americans may be healthier and more active than previous generations were, you can’t apply generalizations to specific situations. For example, BLS notes that the labor force of the 75-and-older age group is expected to grow about 86% from 2014–2024. Those workers are putting a lot of faith into a future that can be uncertain.

Prepare for Uncertainty

That uncertainty can be anything from poor health or a changing job market to the death or disability of workers or their loved ones. That’s why it’s important to plan for a normal retirement age, which is between 66 and 67 for most people retiring in the next few years, and then hope for the best.

How best to get going? Start by preparing financially with the help of a financial professional. Some older Americans continue to work to pay for healthcare, which can be expensive even when qualifying for Medicare. Make sure you have the proper health insurance beyond Medicare that covers out-of-pocket costs such as deductibles. Don’t forget about contributing to a Health Savings Account if you have a high-deductible health plan. You carry any balance until it’s exhausted without time restrictions.

As long as you’re working, increase your retirement plan and IRA contributions. If you qualify by income, contributing to a Roth IRA may also make sense because qualified distributions are tax-free. Then, if you have to stop work at 66, you have built some retirement income. If you keep working, keep building.