By Mark Miller
CHICAGO, May 30(Reuters) - Baby boomers have been talking a good game for years about working longer and reinventing the last third of life. Now that it's game time, their retirement decisions look somewhat conventional.
More than half the oldest boomers - those born in 1946 - had fully retired by the end of the year in which they turned 66, the age the Social Security Administration pegs as "full retirement age," according to a new survey by the Metlife Mature Marketing Institute.
Those boomers retired an average of five years earlier than they had predicted they would; the Metlife survey found that the average filing age for the oldest boomers is 63.6. Those who haven't yet retired continue to forecast longer working lives: They say they will hang in until 71, up from 69 in 2011.
Even though only a minority of boomers do work longer than the "normal" age, it's a good strategy for those who may not have fully prepared for retirement.
Most important, it's an opportunity to delay filing for Social Security. Working at least until your full retirement age means avoiding early-filing benefit reductions, and every year beyond that age - currently 66 - adds 8 percent to monthly benefits. The higher benefit compounds powerfully over time with the program's annual cost-of-living-adjustments.
Working longer also allows you to continue contributing to retirement savings, building additional balances that can be put to work in the market. And every additional year of income from work is a year in which you're not drawing down retirement balances.
Just three additional years of work beyond 66 can boost income down the road from Social Security and investments by 50 percent or more, according to hypothetical modeling by T. Rowe Price.
That means you can benefit from working longer without going all the way to "work until you drop" - and people are getting the message. A recent Gallup poll found that the average U.S. retirement age is 61 - up from 59 a decade ago and 57 in the early 1990s. Among current workers, 37 percent plan to retire after age 65, up from 14 percent in 1995.
Here's the problem with that work-longer plan: Stuff happens. The Metlife survey found that 54 percent of boomer retirees left the workforce earlier than they intended, most frequently for health reasons (32 percent) or job loss (25 percent).
So, what constitutes a viable Plan B if Plan A - working longer - doesn't pan out?
Find a way to delay your Social Security filing at least until full retirement age. Cover living expenses from part-time work or from a spouse's income, or even by making withdrawals from your savings.
A research paper published last year in the Journal of Financial Planning concludes that this strategy can boost the life of your portfolio significantly over the years of retirement, because higher Social Security payments down the road alleviate pressure to use savings.
The paper was written by William Reichenstein and Bill Meyer, the co-founders of SocialSecuritySolutions.com, a company that advises clients on how to maximize Social Security benefits. An example of their findings: A retiree with a monthly Social Security benefit of $1,500 at his full retirement age of 66 and a $700,000 tax-deferred retirement account could extend the portfolio's life seven years by delaying his filing for Social Security to age 68 over its longevity had he filed at 62.
Aside from on-going living expenses, try to set aside extra funds for unexpected events, said Sandra Timmerman, director of the Metlife Mature Market Institute. "Health issues can derail a retirement plan, especially a long-term-care need," she said, adding that retirees often also find themselves needing to provide financial support for an adult child or to recover from natural disasters, such as a tornado or other natural disaster.
The Metlife survey also offered some cheerful news about retired boomers: 38 percent quit work simply because they'd had enough of it and felt confident they had the financial wherewithal to pull it off.
Indeed, 70 percent of the oldest boomers who are retired said they "like it a lot," and 26 percent "like it somewhat."
Finally, 82 percent of retirees rate their health as "good to excellent." That lends some reassuring heft to a common outlook. Said Timmerman, "Retired boomers see the opportunity to do some things they haven't done before."