In Brief: Who Is Ready for Retirement, How Ready, and How Can We Know?

Vulnerable groups

Entering retirement single has clear disadvantages. Unmarried, widowed or divorced retirees are likely to outlive their resources. Those with less than a high school education are also economically vulnerable and face a greater chance of outliving their financial resources.

Housing

For most people, their home is their biggest financial asset and home equity has traditionally not been tapped until well into late retirement years. Baby boomers may not have this luxury and may have to resort to reverse mortgages to make up the difference between a difficult retirement and one that maintains pre-retirement living standards.

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Public Policy Implications

The nation has a stake in the decisions baby boomers make about retirement. The impact on Social Security and Medicare is widely known but there are other consequences. A core of baby boomers with serious economic needs could become a large new dependent population. Some policy options could help both the boomer and the U.S. economy:

Improve financial education. Baby boomers are surprisingly unaware that the retirement age when they can collect retirement benefits such as Social Security, is steadily increasing. The Social Security Administration should do a better job helping people understand their retirement options and more research needs to be done on the financial education employees and consumers need.

Educate employers to hire older workers. Many older workers want to work past retirement age; others may have to work. But finding work may be difficult. Age discrimination still exists in the workplace in various forms. Diversity in the workplace is increasingly accepted; older workers should be part of the diversity picture.

Phased retirement. Government should encourage older workers to work longer by promoting phased retirement, the so-called “bridge” jobs and part-time jobs.

Sophie Korczyk, Analytical Services, Inc.
John Gist, Project Manager, AARP Public Policy Institute
January 2008
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