This is a printer-friendly version of an article from Zip06.com.

Is Retirement a Thing of the Past?

It's no longer a shock to see older Americans staying active in the workforce. Many baby boomers are retiring, but others are working into their 70s. According to the Bureau of Labor Statistics, the percent of adults in the workforce aged 65 and older increased from 11.8 to 17.4 between 1990 and 2010. Is it a choice, or a matter of paying the bills?

For some, it is a choice. Betty Christensen of North Guilford retired last year at age 83 from doing what she loved: She worked as a bookkeeper with flexible hours.

"For me, I didn't think it was unusual," said Christensen, who does yoga once a week and is even now considering getting a part-time job. "I don't think of myself as being 83, because I'm very healthy. Never think of yourself as old."

Although the odds are improving, not all Americans can count on good health as they age. For many, retirement is still something that takes place in the 60s, either because they can afford to retire or because they cannot continue to work.

"We work with a lot of Connecticut public school teachers and large corporations; most of these clients are still retiring under age 65 because they do have pensions," said Tracy MacKinstry of MacKinstry Financial & Investments in Clinton.

Today's workers are far less likely to receive pensions than they were 20 years ago.

"Younger people entering the workforce are going to see fewer companies offering pensions to employees," MacKinstry noted—even with the companies that used to offer them. "Those that don't have pensions and are only relying on Social Security and retirement savings seem to be retiring in their early 70s."

Employer-offered health care in retirement has also declined over the years. Fewer pensions, reduced benefits, and an increase in debt are causing more Americans to work longer or to take a second job out of necessity.

"People are working more into their later years to cover costs of health care, pay down debts from mortgages, student loans, and credit cards," said MacKinstry. "People are also working later to try to put more into their retirement accounts so they feel they can keep the same standard of living when they do retire."

According to AARP, only about a third of older Americans receive payments from pensions and retirement savings. Social Security is the mainstay of retirement income; today, you can begin to claim full retirement benefits at 66 or 67 years of age.

You can start as early as age 62, but "if you were to take it earlier, you'll receive less income for life," said David Cowan, owner of Legacy Retirement Group in North Haven.

Getting on Medicare, the federal program that helps cover medical costs for the elderly, also helps tremendously with bills. Cowan noted that most individuals cannot afford health care until age 65, when they become eligible for Medicare. Yet many individuals who depend on Social Security and receive Medicare continue to work—often into their 70s—or find other ways to save.

"Quite a few downsize their homes, and many have been moving out of state to lower expenses," said MacKinstry. "Many people will retire from their full-time employment and take a part-time job."

Transitioning from full-time employment to part-time work or retirement is a huge change.

"Retirement is an adjustment period for people," said MacKinstry. "They need to learn new routines and will have different spending habits."

Planning Ahead

For anyone planning to retire, saving is imperative—no matter your age.

"Someone in their 50s and 60s should continue to contribute to their retirement accounts," said MacKinstry. "They should meet with an advisor one to two times minimum per year to look at their whole financial picture, help them formulate a retirement plan, act as a coach, and help them stay on track. These years are very important."

Although many older Americans end up relying on Social Security, that's not a best case scenario.

"Social Security was never designed to be the sole provider of retirement income, but to just replace 40 percent of the average wage," said Cowan. "This causes people a big need to accumulate more in savings to make up the added income needed. Generally, you'll need about $300,000 in savings to generate a $1,000-per-month income, and it can take time to build up that type of savings."

While we can't all work until we're 83, with better health overall—and less physically demanding jobs—it is becoming possible to work much later in life.

But there's one more consideration that's part of the package: "Today people must prepare to live longer; just a couple more years in retirement can cost tens of thousands of extra dollars," Cowan noted.

How Should I Prepare for Retirement?

Advice for 20-Somethings

When it comes to planning for retirement, it's obvious what you need to do: Save more, spend less. What's less obvious is how to achieve this. According to David Cowan of Legacy Retirement Group, start by saving a minimum of 10 percent of your earnings.

"When you get a raise, save more," he said. "You'll never regret it."

"Don't think that you have to pay off all of your debts before saving," added Tracy MacKinstry of MacKinstry Financial & Investments. "Financial planning is a balancing act."

According to Cowan, the best place to save money is in your employer's retirement plan.

"They use payroll deduction, so you won't miss it," he said. "Some companies even offer a match, making it even better; it's free money, take full advantage of it."

As for spending, Cowan recommends saving up for what you want to buy instead of purchasing it right away.

"After you save the money, odds are you'll realize you really did not need what you were saving for in the first place," he commented, adding in general, "Buy only what you need, not what you want. Find things to do that are free or low cost, and never take a vacation on credit."

For many, it's hard to put down a credit card when it's such a convenient way to pay, but getting out of the habit of paying on credit is one of the smartest moves you can make to prepare for retirement.

"We live in a day and age where we are not afraid of debt," Cowan warned. "Credit cards are robbing you of your retirement dollars."

By making small choices today about spending and saving, it's possible to see big results when the time comes to retire.