The personal and economic benefits of delaying retirement

Despite the media’s grim projections about the dismal future of a graying America, MarketPlace’s Chris Farrell remains optimistic about the economic benefits of an aging workforce.

Coining the phrase “unretirement,” Farrell says that earning income past traditional retirement age is good for the “unretiree,” younger workers and the economy in general. Unretirement “can help transform the economy as it continues to heal from the Great Recession,” Farrell said to Reuters.

Farrell is an economics correspondent for public radio's Marketplace and a contributing editor at Business Week magazine, according to his profile on MarketPlace. In his new book, “Unretirement,” “Farrell argues that work has always been an essential part of our community, and that putting off retirement can be a good thing for everyone,” MarketPlace reported.

Why is working longer better for everyone?

Geoffrey Norman of the Wall Street Journal explains, “Retirement is, itself, a big event, one that millions of Americans increasingly fear. In the abstract, it sounds pleasing enough. … The reality, as usual, is falling short of the dream: There is often too much time, too little money, diminishing hope, failing health and that one big event looming up ahead.”

Working past traditional retirement age is better financially because it “changes the financial picture — and not just income,” Farrell told Reuters.

Jonnelle Marte of the Washington Post reported that “those who delay collecting Social Security see their annual benefits grow by 8 percent for every year beyond their full retirement age, until they reach 70.”

But later retirement is also better for mental and physical health.

“Sixty-two percent of retirees said their top reason for working in retirement was to stay mentally active,” according to a study by the research group Merrill Lynch and Age Wave, according to the Washington Post.

The Institute of Economic Affairs and the Age Endeavour Fellowship’s research “found that both mental and physical health can suffer” when a person retires, controlling for age, according to the Independent. Philip Booth, the editorial and program director of the institute said, “Working longer will not only be an economic necessity, it also helps people to live healthier lives.”

Farrell said he's received flak from younger unemployed workers who blame seniors hanging on at the office for a tight job market. But “the job market is not a zero-sum game,” he responded in MarketPlace. “If older workers are getting jobs, it turns out younger workers are also getting jobs. We’re all in it together. The pie will continue to grow.”

“And the longer you work, of course, the more money you will have when you eventually do retire, a strategy that works to the good of society too, since your paychecks will be contributing to FICA and will help keep the system running,” said the Journal's Norman.

Others reject Farrell’s optimism about a postponed and more gradual wave of retirement.

The Pew Research Center's population projection expects that “every day for the next 19 years, about 10,000 more will cross (the retirement) threshold. By 2030, when all Baby Boomers will have turned 65, fully 18 percent of the nation’s population will be at least that age.”

Critics don't expect the retirement boom to let up and they expect the consequences to be detrimental.

“The retirement of massive numbers of baby boomers over the next decade or so will put a drag on the U.S. economy,” says the Financial Advisor.

Michael Miller, an associate professor of economics at DePaul University, told CBS: “Baby boomers are going to begin retiring at a really quick pace … and the number of people working is going to go down. When you add those two things together, you have a crisis.”

Farrell argues in his book that despite the “warnings of demographic doomsayers who predicted that a wave of baby boomers would bleed America dry, bankrupting Social Security and Medicare as they faded into an impoverished old age … we are instead on the verge of a broad, positive transformation of our economy and society.”

Baby boomers are delaying retirement because “they want to work longer,” says Farrell on MarketPlace. And it is bettering themselves and the economy.

dsutton@deseretnews.com; Twitter: @debylene