Finance

Planning to delay retirement may not rescue you from poor savings

Published

8 months ago

September 17, 2024

Alistair Berg | Digitalvision | Getty Images

Planning to work longer is a popular escape hatch for Americans who feel they’ve saved too little to support themselves in old age.

About 27% of workers intend to work in retirement because they need to supplement their income, according to a new CNBC and SurveyMonkey survey. They polled 6,657 U.S. adults in early August, including 2,603 who are retired and 4,054 who are working full time or part time, are self-employed or who own a business.

While working longer is among the best ways to shore up one’s nest egg, the plan may backfire, according to retirement experts.

CNBC Retirement Survey: 44% of workers are 'cautiously optimistic' about reaching retirement goals

Workers may not be able to work into their late 60s, early 70s or later due to an unexpected health complication or a layoff, for example.

“It sounds great on paper,” said Philip Chao, a certified financial planner and founder of Experiential Wealth, based in Cabin John, Maryland. “But reality could be very different.”

If workers lose those wages, they’d have to figure out another way to make their retirement savings last.

Workers often retire earlier than planned

A nonexistent ‘escape valve’

Americans generally use a later retirement age “as an escape valve which doesn’t necessarily exist,” Chao said. “But saying it and doing it are two totally different things.”

It could ultimately be a “very dangerous” assumption, Chao said.

Many people who retired earlier than planned, 35%, did so because of a hardship, such as a health problem or disability, according to the EBRI survey. Another 31% of them retired due to “changes at their company,” such as a layoff.

It sounds great on paper. But reality could be very different.

Philip Chao

founder of Experiential Wealth

More than half, 56%, of full-time workers in their early 50s get pushed out of their jobs due to layoffs and other circumstances before they’re ready to retire, according to a 2018 Urban Institute paper. Often, such workers earn substantially less money if they ultimately find another job, the paper found.

Of course, some people exit the workforce early for positive reasons: More than a third, 35%, of people who retired earlier than anticipated did so because they could afford to, EBRI found.

There are benefits to working longer

Working longer — for those who can do it — is a financial boon, according to retirement experts.

For one, workers can delay drawing down their savings; that keeps their nest egg intact longer and may allow it to continue growing via investment profit and additional contributions. Workers can also delay claiming Social Security benefits, which can boost how much they receive.

Some people continue to work longer because they like it: About a quarter, 26%, of workers said they want to work in retirement, and 17% of retirees continue to work in some capacity because they enjoy it, according to the CNBC retirement survey.

Americans may also get non-financial benefits from working longer, such as improved health and longevity. However, research suggests such benefits depend on how much stress workers experience on the job, and the physical demands of their labor.

Working longer also appears to be more of a possibility for a growing share of older workers.

“A shift away from a manufacturing economy to one primarily focused on delivering services and information facilitates working to an older age,” Jeffrey Jones, a Gallup analyst, wrote.

Finance

Insiders at UnitedHealth are scooping up tarnished shares

Published

2 days ago

May 16, 2025

Business Finance News

Key Points

UnitedHealth Group saw some of its insiders step in and purchase declining shares this week.
Kristen Gil, a director at the firm, bought 3,700 shares worth roughly $1 million on Thursday.
Shares of UnitedHealth plunged nearly 11% to $274.35 on Thursday following a report in The Wall Street Journal that the Department of Justice is conducting a criminal investigation into possible Medicare fraud.

Finance

Federal Reserve will reduce staff by 10% in coming years, Powell memo says

Published

2 days ago

May 16, 2025

Business Finance News

U.S. Federal Reserve in Washington, DC, on January 30, 2024.

Mandel Ngan | Afp | Getty Images

The Federal Reserve will look to reduce its headcount by 10% over the next couple of years, including offering deferred resignation to some older employees, central bank chair Jerome Powell said in a memo.

“Experience here and elsewhere shows that it is healthy for any organization to periodically take a fresh look at its staffing and resources. The Fed has done that from time to time as our work, priorities, or external environment have changed,” Powell said in a memo obtained by CNBC.

The central bank chief added that he has instructed leaders throughout the Fed “to find incremental ways to consolidate functions where appropriate, modernize some business practices, and ensure that we are right-sized and able to meet our statutory mission.” One method for shrinking the staff will be to offer a voluntary deferred resignation program to employees of the Federal Reserve Board who would be fully eligible to retire at the end of 2027.

The central bank said in its 2023 annual report that it had just under 24,000 employees. A 10% reduction would bring that number below 22,000.

The memo comes as the Trump administration has pushed for cost cuts across civil service agencies, spearheaded by Elon Musk and the so-called Department of Government Efficiency. Musk has previously called the Fed “absurdly overstaffed.” Powell’s memo did not mention Musk or DOGE as a factor in the decision to shrink headcount.

The planned staff cuts were first reported by Bloomberg News.

— CNBC’s Matt Cuddy contributed reporting.