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Some believe delayed retirement will fix Social Security and more. But the economy will bite back. The still-working life won't be easy.
Published on December 6, 2004 By joeKnowledge In Home & Family
SOURCE: MSN Money

Jubak's Journal
What if nobody retires?
By Jim Jubak

Lately, the idea of working longer and retiring later has become the financial planning equivalent of a free lunch.

You've heard this one from the politicians: If everyone delayed retiring for a couple of years, it would "fix" Social Security. And from the financial planners: Keep working if you haven't saved enough for a comfortable retirement.

You've probably heard it so often that the idea dances through your head whenever you start to stress out about your own retirement.

However, every investor knows that most free lunches are largely baloney. And so it is with delayed retirement. The changes in the economy that would result if all the Americans between 55 and 64 decided to work for a few more years -- and the number of Americans in this age group will be 73% higher in 2020 than it was in 2000, according to the U.S. Census Bureau -- are so sweeping that no one planning their retirement should assume that the benefits of a delayed retirement today will be around in 2014 or 2024. In a market economy, we should expect the market to bite back by making adjustments to such details as pay, demand for jobs, prices of goods and services, and tax rates.

So what would the economy look like if everyone put off retirement and kept working? In this column I'm going to sketch out my vision for that economy and suggest...




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