­Steve Vernon doesn’t just dish retirement advice – he lives it. After working for decades to help companies design and manage their retirement programs, in his later years, he’s perhaps busier than ever: He is a research scholar at the Stanford Center on Longevity’s Financial Security Division, a contributor to CBS Moneywatch, as well as the president of a communications firm. In short, he’s a perfect example of his own theory about retirement: “Use it or lose it.”

What’s the benefit of older people working longer?

One aspect is purely financial. A lot of people don't have the resources to retire in their early 60s, so working may be a financial necessity. Even for those people who have adequate resources to retire, we're seeing people having some work they enjoy later in life. I'm doing it myself and I think it's pretty cool. Doesn't mean you're doing the 40, 50 60 hours you did in your career phase. I think it's important you look at the work you’re doing, and do less of what you don't like to do and more of what you like doing. One important part of that is ditching the commute. For people who slug it out an hour each way, that's one of the things that makes work the most undesirable. Look at ways you can make working more enjoyable and do that as long as you can.

How has the increased number of years in retirement affected the way people save for that period of life? 

Stanford shows that the average length of retirement in 1950 was about 8 years. Now it's 19 or 20 years. It’s simple math: Being retired for 8 years versus 19 is going to take a lot more money. The fact that we're living longer means either we'll have to save more money or work longer or some combination of that. I think people should be saving enough so they have a chance of retiring in their mid-60s. If you're in your 30s saving about 15 percent of your pay (including your employer’s match) and you did that for 30 years, you'll be in the ballpark in your mid 60s. You’ll want to save more if you start saving later or want to retire before your mid 60s. The later you start saving the more you have to save if you want to hit a certain target.

How will a longer retirement impact health care costs?

Health care is a big issue for people approaching retirement right now. If you're in your 50s or 60s, you have to see what the health care premium would be if you're not covered by your employer’s plan. That can be a thousand dollars a month or more for people who aren't eligible for Medicare. But Medicare-eligible people could still be paying 500 or more. You have to factor that into how much you need to save for retirement.

Do we need to do more to promote financial literacy?

We need to prepare people more but there's only so much you can do. Retirement planning in your later years can be complicated and many people don't have the interest or ability to do it. In addition to trying to educate people, I'd like employers and financial institutions to come up with viable solutions that employees can simply adopt. Everybody drives a car, but how many people really know how internal combustion works? We need to package retirement solutions so people can make an informed choice without needing to learn the economic science behind these solutions. It needs to be easier for people to retire without having them become their own actuary or portfolio manager.

How can people be convinced to work longer?

I think they need to see how much savings it will take to really retire for the rest of their lives. People might be approaching their retirement years with $300,000 in their 401K, but really $300,000 over 20 years is not that much. They need to face the hard reality of the numbers and then that might bring them to the conclusion that they should work longer. Facing reality is what gets people to decide to work longer. And if working longer sounds like drudgery, like a prison sentence, then they have to think about how they can make working more enjoyable.

Why is it good for the country if older people work longer?

If you have people that are physically capable of working and being productive but they're not, that's a drag on the economy. You really have to look at the number of people who are working as supporting the people who are not working. We see evidence that in countries where there’s early retirement, like Italy, Spain and Greece, the economies doesn’t do well. They also have high rates of dementia – higher than countries where people work longer. It’s just better to have people engaged in life and contributing to society throughout their lives.

What are some barriers that prevent older people from working longer?

Some of it is cultural and attitudinal. They think they’re entitled to stop working at some point. Others get laid off and can't find jobs. Another issue is that some people think they don't want to do work that's beneath them. I take issue with that. I think if you need the money and you need to work, why worry if this is beneath you or not? Health is another issue. Some get into health problems in their later years. Another reason is that some people, often women, become caregivers for their husbands or older relatives, and need to leave the workforce.

Studies show that individuals’ confidence in their ability to retire comfortably, or to retire at all, is at new lows. Why is that?

First of all they're seeing scary headlines that say people lack confidence. It's kind of a self-fulfilling prophecy. You have to look at the assumptions in these studies behind the headlines. One assumption is that you have to have the same standard of living as when you were working. That standard sets a pretty high bar. People who are retired say they're living on a lot less money while retired than while they were working, and yet these retirees are still happy. These studies assume you need the same income as when you were working, but if your kids have moved out of the house and you’ve paid off the mortgage, you’ll need a lot less money in retirement. Obviously this doesn’t work for everybody, so you’ll need to see exactly how much money you need to meet your needs and be happy, considering your circumstances.

What can be done to increase peoples’ confidence in their ability to retire?

I would like to see employers do more for their employees to help them prepare for retirement. People who do financial planning are more confident then those who don't. Those people who do the planning know their circumstances and have an action plan to make it better. So they're more confident. Those who don't are scared. I’d like to see employers help their employees think these issues through more.

As people have more and more careers throughout their lifetime, how will this affect retirement saving?

It’s important to think about how you plan out your life. Just be prepared to recycle yourself through different careers and re-educate yourself, get new skills. You're just not done learning new skills in your 30s, 40s, even 50s. It's really thinking about keeping your skills up to date.

What about pensions?

You want to be aware of what your employers' plan is. If you have a traditional pension plan, that discourages people from switching jobs. But not many people have those plans anymore. They're still prevalent at governments, but by and large more employers have a 401K or a hybrid plan that doesn't discourage job switching. The more important thing to do is, when switching jobs and you get a payout from your employer, don't spend it. Roll it over to an IRA and keep it invested for retirement, no matter how small it may seem.

Does Gen Y have to think differently about saving for retirement?

At this stage, I think having a Gen Y person think a lot about retirement is just not going to hit their radar. They're better off establishing good spending habits, buying houses, getting their lives established and good health care habits. All they need to do is save the maximum that’s matched in their 401K plan. As long as they do all these things, they are off to a good start in life. And then just consider that they might be working until they’re 65 or 70. But that's not going to cause them to do anything differently today.

Interview by Jordan G. Teicher.