Avert retirement crisis by ‘working longer, saving more, and passing fewer assets on to heirs’

by Grace

“The idea that people can retire at 62 and walk around holding hands on the beach, it’s not realistic.”

Alicia Munnell’s new book warns about the upcoming retirement crisis in the United States.

Munnell, director of Boston College’s Center for Retirement Research, has completed a new book that concludes the golden age of retirement is over and Americans must adjust their practices and expectations. In the book, “Falling Short: The Coming Retirement Crisis and What to Do About It,” Munnell and her co-authors argue that retirement security in the 21st century means working longer, saving more, and passing fewer assets on to heirs.

The book, to be released Dec. 12, serves as a clarion call for new thinking and policies on retirement, including making it easier for workers to save and shoring up Social Security, which, in less than 20 years, will be unable to meet all its obligations.

If nothing is done, the book warns, “millions of retirees will find that they are too old to return to work and have little in savings — and no one to turn to for help.”

Traditional pensions are a thing of the past for most workers.

…  In 1983, nearly two of three workers with retirement plans enjoyed a traditional pension; in 2013, less than one in four depended solely on such pensions, according to the Center for Retirement Research.

Most should continue working until age 70.

By delaying retirement until 70 from 62, individuals can increase Social Security checks by 76 percent, she said. Working longer also delays spending retirement nest eggs while providing more time to save. Munnell and her co-authors propose raising the earliest age for collecting Social Security to 64 from 62.

“People need to understand that one of the most potent levers is staying in the workforce,” she said.

This solution works for many, but some jobs that require manual labor simply cannot be done by older people.

The controversial recommendation of reverse mortgages may be opposed by potential heirs.

One of the book’s more controversial recommendations is to use reverse mortgages, which allow seniors to take equity from their homes to pay for retirement. When they die or leave the home, the property goes to lenders.

Today’s college graduates should understand that 73 is a realistic retirement age.


 Deirdre Fernandes, “Top economist says many face an old age of less money”, Boston Globe, November 30, 2014.

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