Retirement: How long will you have to wait?

“For millions of Americans approaching retirement, events of recent weeks are delivering a clear message,” said Kelly Green in The Wall Street Journal. “Not so fast.” The stock market drop and the credit crisis have been a wake-up call to baby boomers, many of whom are rethinking plans for retirement. “Their expectations about the future and the kinds of returns they would get were simply unrealistic,” says financial planner Helga Cuthbert. In the scheme of things, staying in the workforce may not be the worst alternative. Doing so not only gives workers more time to build up their savings but also can boost Social Security benefits.

“Even a short delay can have a dramatic effect” on how much you can put away for retirement, said Kathy Kristof in the Los Angeles Times. “How dramatic? That depends on the length of the delay, whether you continue to save while working, and whether you earn a decent return on your savings.” As a general rule, every year that someone remains in the workforce will fund three additional years of retirement, and “despite recent shake-ups in many industries, the job market going forward may well favor older workers.” Assuming that more Americans retire than enter the workforce, the labor market should tighten. Even if you take a pay cut or only work part time, it could do wonders for your nest egg. “If you can’t stomach the idea of doing what you’re doing for an additional year, do something else.”

Before abandoning the dream of retiring, reconsider what you really need to live on in retirement, said Scott Burns and Laurence J. Kotlikoff in The Boston Globe. It might be less than you think. Experts in the financial services industry will invariably claim you need to have saved enough to spend 80 percent of your pre-retirement income each year during your retirement. But that percentage “has no connection to life as most of us know it.” We typically spend a large chunk of our incomes raising children and paying off our mortgage. Take those factors out of consideration, and living comfortably in one’s golden years may seem surprisingly within reach.

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