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Tough times keep older workers from retiring

Don't plan on attending many retirement parties this year: More Americans are working into their so-called golden years, and experts say a combination of economic factors will sustain this trend in the near future.

"People have basically gotten scared," said Marcie Pitt-Catsouphes, executive director of the Sloan Center on Aging & Work at Boston College. 

According to the Employee Benefit Research Institute, just over 40 percent of Americans 55 and older are still in the workforce, a figure that has been climbing steadily since hitting a trough of just under 30 percent in the early '90s. "Certainly there are some who want to work," said Craig Copeland, senior research associate at EBRI. More older workers have this opportunity because there are more jobs today that are physically undemanding, as compared to decades earlier.

But experts say the main reason older employees are staying on the job is because they have no choice. "People have been telling us in our surveys that they've reevaluated the age they were going to leave the labor force in a large part due to the economic downturn," said Sara Rix, senior strategic policy advisor at AARP's Public Policy Institute. 

Workers who were lucky enough retain jobs during the recession are hanging onto them for several reasons. More employers are shifting from traditional, defined-benefit pensions to defined-contribution plans. Rather than a monthly stipend for life, today's employees have a fixed dollar amount on which they have to live in retirement. "A lot of people are going to be leery of tapping into that because it is a finite amount," Copeland said. 

Many current employees — not just boomers — haven't been saving enough in 401(k) and related retirement plans. Even people who did save diligently might have seen their nest eggs crunched by drops in the stock market. Women between the ages of 55 and 64 in particular make up a growing number of older employees. Since women were likelier than men to quit or work part-time while raising families, they're making up for lost time to boost their retirement savings.

The moribund real estate market is also to blame. Homeowners who refinanced and expected to sell at a profit may now have no choice but to keep making those monthly payments. "If they reach retirement age with a mortgage, that's a big chunk of change and I think that's got to be a factor in people's retirement decisions as well," Rix said. 

Finally, there's the issue of health insurance. Copeland pointed out that it's prohibitively expensive for someone at the "traditional" retirement age of 55 to buy health insurance privately, even if he or she is healthy. "Health care coverage is tied to employment in our economy," Rix said. "You really need to remain in the labor force until you're eligible for Medicare." 

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