March 9, 2016 by Mark Hammerstrom
Have you heard a ‘sonic boom’? I have, many times when I was a kid. I remember the windows of our house rattling, dogs barking and that deep ‘BOOM’ sounding like a bomb dropped right next door.
This memory should immediately identify me as part of the tail end of that great generation known as the ‘boomers.’ With that has come the realization that there are many significant decisions coming at me at supersonic speed. At least that is the way it feels. Actually I guess you would call me a ‘tweener’—that is, too young yet to collect Social Security, yet close enough to need to be prepared to make intelligent decisions on a number of important lifestyle and financial choices when the time does come.
Before I go any further: I am not a financial advisor (heck, I don’t even play one on TV!) am making no recommendations and this is not intended to provide any guidance whatsoever. What I did want to share was a perspective on how individual these choices are and how much our heart, head–and bodies–play in making them.
With that disclaimer, I think it is fair to say that the general consensus of advisors I have read suggest taking Social Security benefits as late as possible, or at all events as close to full retirement age as practical. The monthly benefits we receive increase nicely the longer we wait. Yet there is an argument that goes in the opposite direction. That is, for many of us beginning to collect at the earliest possible moment, at age 62, is really the right thing to do.
This somewhat contrarian opinion came up in an article “Extending retirement age falls heavily on sore backs.” by Brad Allen, writing in the Minneapolis StarTribune.
Allen’s article initially focuses on the fact that for some of us taking benefits as early as possible is really not a choice. Many of us have had hard, physically demanding jobs that preclude us from working longer due to injury or extensive wear and tear. Putting up with more job related stress and strain can not only impact our quality of life, it can also be dangerous. Yet I thought that most Americans waited until at least until full retirement age to ‘retire’.
Not so, apparently. According to Allen: “Even though the proportion of older workers staying in the workforce past retirement age is increasing, according to government statistics, 58 percent of men and 65 percent of women applying for Social Security benefits in 2014 did so before reaching full retirement age of 66…So extending the retirement age even beyond its current limits is pushing against the overwhelming practice and expectations of the majority of older workers.”
He goes on to quote Phyllis Moen, a sociology professor at the University of Minnesota, who has studied the issue in more detail. Her findings were that “…it’s not just the physical wear and tear from manual labor that causes people to retire early. Escaping the emotional toll of stressful work situations, providing care for an aging relative and being caught in corporate downsizings all force people to retire earlier than they otherwise might…”
Realistically, Moen contends, “…most workers are faced with only two options, full-time employment or full-time retirement…” Allen says Moen “…advocates increased employer flexibility and policy options such as greater availability of phased retirement and prorated benefits for part-time or seasonal employment. Such moves, Moen argues, would make it easier for older workers to embark on an “encore career.”
Truly, I think that our definition of ‘retirement’ in general is changing as is the image of a ‘senior’ given improvements in health care and longer life expectancy. These decisions are not easy, however, and they can also be complicated. Allen brings up many good points, and are worthy of consideration as we ‘rocket’ toward that point in our lives when we simply ‘do something different’ than retire in the classic sense of the word. Knowing, though, that there is a reasonable alternative to stretching our work lives beyond reason is helpful, especially when the alternative could be very harmful.
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