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Is Working Past Age 65 A Realistic Option For You?

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August 04, 2012 - Is Working Past Age 65 a Realistic Option for You? - by Morningstar Investment Research

My retirement portfolio has underperformed during the past several years, and it looks like I'll have to keep working longer than I had anticipated. Are there any potential pitfalls of which I should be aware?

Morningstar assistant site editor Adam Zoll recently tackled this question, stating that working into your late 60s and 70s, once seen as unusual, is indeed becoming more common. In fact, the number of U.S. workers age 65 and older doubled from 1977 to 2007, according to the U.S. Bureau of Labor Statistics, while the number of workers age 16 and older increased by about 60%. Currently about one out of six seniors works or is looking for work, a rate that has been increasing since the late 1990s. According to data compiled by the Social Security Administration, wage income is the second most important source of income for people age 65 and older, trailing only Social Security. Low savings rates are pointing many toward a working retirement, but Zoll pointed out a number of reasons workers' plans to stay on the job well into their senior years can become derailed.

Do You Have a Viable Plan for Long-Term Care?

Given the inhospitable backdrop of skyrocketing long-term care insurance premiums, many consumers are opting to go without the insurance altogether. Wealthier individuals might decide to foot the bill from their own savings when and if they need long-term care. Less-affluent consumers, meanwhile, may conclude that forking over long-term care premiums simply isn't a good use of their assets if they're also behind on being able to meet basic needs during retirement, or they have missed the window to purchase long-term care at a reasonable price. For such people, Medicare and Medicaid might be their only options should they need long-term care. But Medicare only covers long-term care needs under a limited set of circumstances and for a short period of time. Qualifying for Medicaid, meanwhile, can be a devilishly complicated process. Morningstar director of personal finance Christine Benz says if relying on these programs is your fallback plan, it's a good idea to understand the ins and outs of them well before you get close to needing them.

Among the other topics we addressed this week:

The Error-Proof Portfolio: Don't Give Up on Growth Stocks. Strong fundamentals and favorable tax treatment bolster the case for maintaining exposure to this part of the style box.

Should You Let Vanguard Handle Your Income Needs? Vanguard's managed payout funds are useful, but they do have limitations.

When Investors Misuse Quality Funds, Part II. This week we look at foreign-stock funds and taxable-bond funds with investor returns that lag their total returns.

Have Emerging-Markets Bond Funds Emerged? We could have to start looking at emerging-markets debt differently.

Fund Investors--Know Your Rights (Offerings). We explain three different flavors of rights offerings for closed-end funds.

2 Young Funds Struggle to Get Noticed. Sometimes a manager's track record isn't enough to draw a crowd.

A Relative Case for Commodity Funds. Customer segregated funds were once thought inviolable. My, how the times have changed.

Will Agriculture Companies Get Burned by Scorching Weather? While exceptionally hot and dry weather in the U.S Corn Belt has sent crop prices soaring, the final impact on agriculture stocks will depend on what happens to farmers' wallets.

Global Telecom, a Compelling Combination of Dividends and International Growth. This sector-oriented ETF offers the best of both worlds for investors: income, low volatility, and exposure to fast-growing emerging markets.

Despite Distribution Cuts, This Fund Is Worth a Look. Even with several distribution cuts i n recent years, Wells Fargo Advantage Income has had solid total returns.

GDF Suez: A European Giant Continues to Turn Outward. With International Power fully in the fold, we think this global energy company is set to leave its diversified peers behind.

Vanguard Shuffles Advisory Ranks. Plus, Oakmark reopens fund, Sentinel managers head to competitor, Lord Abbett makes manager changes, and more.

Compass Minerals Is Worth Its Salt. While near-term earnings are depressed, this company has strong and sustainable competitive advantages for the production of highway deicing salt and sulfate of potash specialty fertilizer.

Huntington Launches Equity Rotation Strategy ETF. AdvisorShares to liquidate its Dent Tactical ETF, and Yorkville offers details on its first actively managed ETF. Plus, the week's best- and worst-performing ETFs.

Draghi Pulls Off a Stick Save. The ECB must weigh several important implications as it contemplates following through on the market intervention implied b y its president last week.

Europe's Credibility Gap. European leaders need to follow up their words with actions if they want to stem the debt crisis.

Should You Manipulate Your Portfolio Ahead of Tax-Law Changes? Morningstar readers discuss the wisdom of conversions, preemptive selling, and standing pat as potential changes come near.

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