🔒Retirement: Navigating the ‘silver tsunami’

The number of Americans age 65 and older will almost double to 88 million by 2050 from the 45 million in 2013, and 2 million baby boomers are still expected to be alive in 2060.

Those numbers will weigh heavily on the health, pension and business systems. Their impact will span several generations, including millennials and their children.

Demographer Mark Mather says that by 2030, there will be only three working-age adults for every person 65 or older. That compares to 19 per elder in the year 1900 and 4.4 in 2013. By 2050, the elderly will once again outnumber the younger generations, meaning there will not be enough people to support the tax base. In that year, Mather predicts, the cost of Social Security and Medicare combined is expected to reach 12% of the U.S. gross domestic product.

Mather, associate vice president of U.S. Programs at the Population Reference Bureau, a nonprofit demographic group based in Washington, D.C., spoke at a recent National Press Foundation fellowship on “reporting retirement” that I attended.

He, along with the other speakers, painted a picture of a “silver tsunami” of retirees facing dwindling savings, high health costs and a potential shortage of caregivers, forcing more of the tending to seniors with Alzheimer's, dementia or other conditions to be taken up by younger family members, and causing older workers to delay retirement.

For those still working, it's never too soon to save for, and plan for, retirement. That includes a drawdown strategy for 401(k) and other retirement savings. The so-called “4% rule” of taking out 4% of your savings annually implies that you've saved $1 million or more, and only 7% of the population has. That's why it's important to look at a plan that fits the individual, says Luke Delorme, research fellow at the American Institute for Economic Research in Great Barrington, Mass.

“One of the best deals in retirement is waiting to claim your Social Security benefits until you are age 70,” he says. Every year delayed beyond retirement adds 8% to the monthly Social Security benefit until age 70.

That means those retiring at the full retirement age of 66 (for boomers born from 1946-1954) get 100% of their monthly Social Security benefit, whereas those delaying till age 70 get 132% of their monthly benefit.

“Retirement distribution mistakes can be very costly,” adds Mary Beth Franklin, contributing editor at Crain's Investment News. “It can make a difference of tens of thousands of dollars over your lifetime.”

Another option, known as “file and suspend,” involves filing for spousal benefits, but allowing the worker to delay collecting his or her own benefit. Single people opting to file and suspend at age 66 can use the saved Social Security money to act like an insurance policy. If a person gets hurt two years later and decides to collect Social Security to pay medical costs, he or she would get a lump sum for the two years there was the in collecting it.

Seniors can look forward to new living options if they prefer to age in place. One example is the village model of neighbors helping neighbors with transportation and other necessities, which started in Boston's Beacon Hill neighborhood about 10 years ago, notes author Beth Baker.

There's also a push by the World Health Organization and others for age-friendly cities, where food is on lower store shelves and aisles have room for walkers, notes Dr. Robert Burke of George Washington University.

With the average life expectancy in the United States rising to 78.8 years in 2012, a record high, and more people living to be centenarians, workers need to plan for expenses at least 13 and possibly 30 years in retirement.

John Kalamarides, CEO and president of Prudential Bank & Trust in New York, said he thinks the first person to live to age 150 already has been born.

Can you imagine working till 100 or more before you can retire?

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