The media is full of reports that many Americans' retirement savings are woefully inadequate and that as a result, many of us will have to work past the age of 65.
So you may be quite surprised to learn that a recent Employee Benefit Research Institute survey shows that 50 percent of retirees have exited their jobs sooner than planned, as
The Washington Post reports.
The causes: half of these people were forced into early retirement by a health issue or because they had to act as a care giver for someone, and layoffs pushed out another 18 percent.
“We always try to tell people you should be prepared for that every day,” Nancy Coutu, co-founder of Money Managers Financial Group in Oak Brook, Ill., told The Post. “Even if the plan is to work forever, Mother Nature often does things out of control, and you are forced into retirement. Bad things happen to good people."
Elsewhere on the retirement front, life expectancy estimates play a major role in the finances of pension plans. That's because the estimates determine how much money the plans set aside to pay retirees.
If the projections are on the mark or overestimate retirees' life spans and the plans put aside enough money to meet those estimates, there shouldn't be a problem. But if the projections underestimate retirees' life spans, leading the plans to put too little money aside, there could be big trouble.
New York Times reporter Mary Williams Walsh
offers a poignant example. Jim Palermo, when he was a trustee of La Grange, Ill., found that the village's pension plan for local police officers and firefighters was underestimating their lifespan.
"After Mr. Palermo dug into the numbers, he found that the actuary was using a mortality table from 1971 that showed La Grange’s police officers and firefighters were expected to die, on average, before reaching 75, compared with 79 under a more recent table."
Oops.
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