The American dream that people would retire at 65 with adequate savings is dead. It has been killed by the recent habit in the United States of saving too little for living the last part of life, a collapse of the real estate market and the sharp drop in interest rates. Now, older people do not expect to retire until 67 or older. That creates a long list of problems for the economy.
According to a new Gallup poll:
The average nonretired American now expects to retire at age 67, up from age 63 a decade ago and age 60 in the mid-1990s.
The first and most important byproduct of this decision is well-known. An older person with a job means the chance that a younger person has one is diminished. The economy does not create enough jobs at the rate of 200,000 a month to offset the trouble this pattern creates.
Another effect of the need for the aged to keep their jobs, or get new ones, is that the population is likely to be less mobile. Retirees who might relocate to the South are not doing so in great numbers. This is one of the reasons the real estate markets in Florida, and probably Arizona, are so poor. Unemployment in those states is high. That tends to trigger mortgage defaults. There are not enough people moving into the markets to buy some of that supply. The change in retirement behavior will keep those real estate markets troubled indefinitely.
There is no reason to believe that older Americans will be able to return to a period in which they can stop working at 60. So, there is no reason to think that the effects of their new behavior will help either housing or unemployment levels among the young.
Douglas A. McIntyre