Will you be able to work longer if you want to?

business-timingMany workers choosing to delay retirement and keep working. In many cases this is out of necessity. Personal financial advisor Suze Orman has even recommended that people stay in their jobs until their late 60s. Employment also provides social contact, a sense of fulfillment, and the opportunity to remain productive. But recent research suggests that more positions are vulnerable to early retirement than previously thought.

But staying employed is often easier said than done. As we pointed out in an earlier post, many workers retire earlier than planned, typically because of health reasons, corporate downsizing, or caring for a family member. Depending on the nature of your job, you might simply find that you can’t or don’t want to continue doing it as you get older. Manual laborers with physically demanding jobs are an obvious example. However this applies to many other jobs as well.

Researchers at the Center for Retirement Research at Boston College recently developed a “susceptibility index” that indicates how susceptible a position is to premature retirement. The researchers found that many positions rely on one or more skills which tend to decline with age. Positions that rely on cognitive processing, psychomotor skills, and short-term memory are particularly vulnerable. This means that electricians, automotive technicians, dentists, and designers can be as susceptible as bricklayers and longshoremen to unplanned early retirement.

The least susceptible occupations are those that rely on long-term memory, experience, and verbal skills. These would include sales representatives, college professors, judges and magistrates, and receptionists. This renders the distinction between white-collar jobs and blue-collar jobs irrelevant for the purposes of retirement, since many white-collar jobs (such as nurses) are susceptible to early retirement, while some blue-collar jobs (such as cooks) are less so.

These findings have implications for many Americans who are planning to make up for a shortfall in retirement savings by working longer. Retiring early means savings must last longer and have less time to grow. It also may require applying for Social Security benefits earlier than planned, resulting in smaller benefits. If you retire before Medicare eligibility, you may lose health benefits and have to find private health insurance to cover the interval until you reach age 65.

The research findings also have public policy implications. There has been some discussion about raising the full retirement age for Social Security benefits, recognizing that people are living longer now and that Social Security is facing a funding shortfall. But these discussions overlook the fact that many people will not be able to work as long as expected. People in high-susceptibility positions are 5 percent more likely to retire at age 65 than those in low-susceptibility positions.

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