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NEW YORK (MONEY Magazine) -
Retirement planning is fraught with uncertainty, but one outcome is sure: When we baby boomers wrap up our careers, we're not going to retire to a rocker on the back porch. No, we're going to have a working retirement.
How can I be so certain? Because this is what boomers say in survey after survey. In fact, roughly eight in 10 boomers report they plan to keep working in some capacity after leaving their regular jobs.
A nice scenario, but I don't buy it.
For one thing, I don't believe healthy 40- and 50-year-olds in the prime of their careers can accurately predict whether they'll still want or be able to work when they're 65 or 70.
Expectation, meet reality: Only 26 percent of current retirees have worked for pay at any time during retirement, and almost half of those don't work anymore because they're not healthy enough or feel they're too old.
Yes, I know the Woodstock generation prides itself on breaking the mold. But a departure of this magnitude strikes me as too big a stretch. Then too, boomers may not want the kind of lower-paying, lower-prestige jobs that are most often open to seniors.
"Boomers may not be psychologically prepared for downward mobility in status or working for supervisors who are much younger," says Notre Dame economics professor Teresa Ghilarducci. Yet we boomers remain convinced we'll redefine the concept of "retire" to "rehire."
Why? My theory is it's our way of rationalizing how little we may be saving for retirement. My nest egg is too small? Nonsense. I'm factoring a retirement job into the equation.
Okay, maybe you're different. Maybe you will be healthy enough to work and will find a fulfilling, financially rewarding second career. But, just in case life doesn't turn out that way, keep your retirement plans on track with these three steps.
Lowball salary estimates
Plugging an extra $30,000 a year from a job into a retirement calculator definitely brightens your financial prospects. But that may be only an illusion of security.
My recommendation: Think hard about how many years you can really work in retirement and how much you might earn, then scale back those projections by at least 25 percent.
Rather than counting on job income that might not materialize, pump up your contributions to your 401(k) and IRA and consider staying at your current job a few more years. You'll probably pull down bigger bucks at your current gig than you would at a different job after you retire, and your nest egg can bulk up further during those extra work years.
Scope out the job market
Familiarize yourself with the kind of work available to retirees so you can plan realistically. Two good places to start: www.retiredbrains.com, where retirees can post resumes and search job listings, and AARP's Money and Work center (www.aarp.org/money), which includes a list of companies, such as Borders and Home Depot, that reach out to mature workers.
Create a backup plan
Some factors you can't control. So consider how you might respond if, say, you have trouble finding work or your health deteriorates. Do you have travel, entertainment or other discretionary expenses you could pare back?
How about ways of generating extra income -- home equity you could tap or a life insurance policy with cash value? Maybe you could trade down to a less expensive home in an area with lower living costs, freeing up cash and reducing expenses at the same time.
Maybe my fellow boomers will prove me wrong and we really will radically transform retirement. In the meantime, though, I plan to save enough so work will be an option for me, not a necessity.
Sign up for Updegrave's weekly e-mail newsletter at money.com/expert. E-mail him at longview@moneymail.com.
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