Why Many Americans Will Never Retire

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Economists have expected for some time that many Americans will need to delay their retirements and work well into their 70s. There are no longer sure sources of investment retirement funds because of the volatile stock market and the drop-off in housing prices. Those who were frightened out of the market in most cases sold too soon and did not get the advantage of the run-up in the market over the last year.

American small business owners have begun to defer retirement, and a growing number say they will not retire at all. They will either be forced out of work by ill-health or will simply die with their boots on.

According to a new Wells Fargo/Gallup Small Business Index poll, “Nearly half, 47%, of small-business owners now plan to never retire until forced to do so for health reasons — up from about 4 in 10 in 2005 and 2007.” Another 41% plan to cut back on work but will not retire.

The survey also shows that business owners will retire later than planned. “When asked about a target retirement age, 69% intend to retire at age 65 or older — up significantly from 41% in 2005 and 52% in 2007.”

The trends will have a profound effects on several sectors of the economy. People who once might have moved south to Florida and the Carolinas are less likely to do so as they continue to work. This could kill a number of resort communities built for people over 60. On the other hand, homes that might have gone on the market as people retired may stay in the hands of their current owners for a decade longer than they might have in 2005. This could keep inventory off the market which would, in theory, help home prices recover.

People who retire at 60 often open up jobs for people two decades younger. Business owners who do not leave keep their younger employees from promotions that might increase their disposable income.

Finally, the deferred retirement of many wealthy Americans may increase the nation’s tax base as people who once planned to leave work and live on less money stay in their jobs because they do not have enough savings.  Some of these people will be a solid base of unexpected ongoing tax receipts.

Results for the total data set are based on telephone interviews conducted July 6-12, 2010, with a random sample of 604 small-business owners.

Douglas A. McIntyre

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