OK, boomers, you're up against it. You were the generation that thought you'd retire early and play. The leading edge of your age group is now halfway through its sixth decade of life. What is the playbook telling you now?
It appears that we're actually growing more inclined to stay at work, says Joseph Quinn, economics professor at Boston College and fellow of the Employee Benefit Research Institute (EBRI) in Washington. That's a trend that started even before the boomers looked 50 in the face.
Until the mid-1980s, people retired at ever-younger ages. Today, it's more financially appealing to hold a job, for several reasons:
Older people have more employment options than they used to. Congress has just decided to pay you your full retirement benefits at 65, on top of whatever else you earn. Fewer private retirement plans encourage an early out. The new cash-value pensions force you to work extra years, for comparable retirement pay.
If you've had a huge stock market windfall, you may be ready for life on the outside. But, according to a 1999 EBRI survey, 68 percent of the people now at work plan to hold paying jobs after they "retire." Of these, only 37 percent said they'd need the money. Nearly two-thirds said they enjoyed working and wanted to stay involved.
At 55, men, on average, have another 27 years to live. Women are looking at 31 years. Many of us will live even longer than that.
Is there a quick way of guessing whether I can retire? Planners suggest that you take 5 percent or 6 percent of your total retirement savings and add any other expected income -- for example, an early-retirement pension or earnings from a part-time job.
In each subsequent year, you'd take the same amount from savings, plus an increment for inflation, says planner Jeff Feldman of Rochester Financial Services in Rochester, N.Y. If you can live on that, you can probably wave goodbye to the job you're doing now.
This rule of thumb might not work, however, if stock prices bomb for two or three years right after you retire, says planner Karl Graf of Graf Financial Advisors in Wayne, N.J. The value of your remaining investments might not cover you for life.
For a better grasp of your retirement chances, you might run your finances through T. Rowe Price's Retirement Income Manager (RIM). You answer some questions about what you want from your money. RIM then suggests an asset allocation, plus an appropriate monthly income. It also gives you the odds that your plan will actually work. Cost: $500 (call 800-566-5611).
For your back-of-the-envelope calculation, two other items come to mind: health insurance (if you can't get retiree coverage, you may be chained to your job); and the 10 percent penalty for tapping retirement money too soon.
There's no penalty for taking funds from a 401(k) if you're at least 55 when you leave your job. But you normally can't touch IRAs penalty-free until 59 1/2.
What level of retirement income should I be saving for? A reasonable guess is 70 percent of what you're earning now. That's from Kenn Tacchino and Cynthia Saltzman, professors at Widener University in Chester, Pa., who study retirement expenses.
You'll probably spend more than that when you first retire, in a flurry of travel and fun. But as you age, expenses ebb. People 75 and up spend an average of 27 percent less than people 65 to 74, Saltzman says. You'll spend more on health care as you age, but your living expenses will drop by much more than your medical bills rise.