You'll Work Longer

Welcome to the era of un-retirement. Whether by necessity or by choice, many baby-boomers expect to work until their 65th birthday or later -- an age at which previous generations traditionally traded a career for a life of leisure. The percentage of workers who expect to retire after age 65 has increased steadily over the past 20 years, from 11% in 1991 to nearly 20% in 2000 and 33% in 2010. Working longer will allow some to rebuild retirement savings that were depleted in the stock-market collapse. For others, it offers a chance to hang on to employer-provided health insurance at least until they qualify for Medicare.

More than 80% of U.S. workers who responded to a Sun Life survey say they will need at least three years to rebuild their retirement savings as a result of the economic crisis. And more than half of them say they expect to work at least three years longer than they had originally planned. In the past, the most popular reason for working past the traditional retirement age was "to stay mentally engaged." Now "to earn enough money to live well" is equally popular, according to the survey.

A separate poll by professional-services company Towers Watson found that four in ten U.S. workers are planning to delay their retirement, with more than two-thirds of them citing continued access to employer-provided health-care coverage as the main reason.

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Does that mean retirement as we know it is dead? No, but workers need to ask themselves when they can afford to retire, given their increased life expectancies and often inadequate savings, says Dallas Salisbury, president of the Employee Benefit Research Institute. "In the past, people simply retired when they reached a certain age, with no idea whether they could afford to," he says. "Now, more people are asking the question in advance. It encourages people to save more, plan better and defer retirement."

But so far, not everyone is getting the message. A recent survey by Charles Schwab found that age, not finances, drives most retirement-planning decisions. Nearly half of 50- to 60-year-olds interviewed for the survey said they have a target date for retirement, compared with just 38% who have targeted a nest-egg amount.

Working longer is a powerful way to bolster your retirement security. It not only gives you more time to accumulate savings but also reduces the number of years you'll have to rely on those savings for income. In most cases, delaying retirement also means delaying when you start collecting Social Security benefits, which means you'll get a bigger check.

Unfortunately, many people who want to stay on the job can't. Workers age 55 and older have been especially hard hit during the Great Recession, enduring record-high levels of unemployment and remaining jobless longer than younger workers, according to the U.S. Department of Labor. Many have been out of work for more than a year, and some are working part-time because they can't find a full-time position.

To see a list of retiree-friendly workplaces, check out AARP's National Employer Team and RetirementJobs.com's age-friendly certified companies. A number of AARP's National Employer Team employers, including SunTrust Bank, CVS and Borders Books, offer limited medical, dental and vision benefits for part-time employees. CVS's "snowbird" program is a bonus for retirees who flock to warmer climates during the winter.

For those forced into early retirement, Social Security can offer a lifeline. You can collect retirement benefits as early as age 62, but they will be reduced by 25% for the rest of your life compared with what you would have collected if you had waited until your normal retirement age of 66. You'll also lose $1 in benefits for every $2 you earn over $14,160 in 2011 if you are younger than 66.