Why planning to work in retirement is a risky business

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BY MARK MILLER

It can make a big difference, but it is tough to pull off. Half of all retirees leave the workforce earlier than planned due to a health problem or job loss.

Blue collar workers with physically demanding jobs are most susceptible to early retirement, according to conventional wisdom. New research confirms that, but it also shows at least one type of early-retirement risk is spread much more widely across job types than previously thought.

These findings serve as a reminder that while working longer is a worthy aspiration, it is not a reliable financial plan. They also underscore a fallacy in the policy debate about raising eligibility ages for Social Security and Medicare.

Researchers at the Center for Retirement Research (CRR) developed a “susceptibility index” for early retirement that ranks 400 occupations on a 1-100 scale (100 is highest risk). They did it by cross-analyzing the federal Occupational Information Network database and the Health and Retirement Study, a long-running University of Michigan research project on Americans over age 50. The susceptibility index looks at the abilities required to do a job and measures the likelihood that those skills will decline with age.

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