More Workers Plan to Postpone Retirement, If They Can

The age at which workers expect to retire has been steadily rising

By Stephen Miller, CEBS Apr 24, 2015

updated 5/5/2015

Offsetting expectations of an impending retirement tsunami as U.S. Baby Boomers leave the workforce, the age at which workers expect to retire has been steadily rising. In 1991, just 11 percent of workers expected to retire after age 65. Twenty-four years later, in 2015, 36 percent of workers report that they expect to retire after age 65, and 10 percent don’t plan to retire at all, according to the 2015 Retirement Confidence Survey (RCS).

The RCS findings, released in April 2015 by the nonprofit Employee Benefit Research Institute and research firm Greenwald & Associates, also turned the question around and found that the percentage of workers expecting to retire before age 65 fell from 50 percent in 1991 to 25 percent in 2015.

But this trend of increasing retirement age expectations may be slowing. Between 2009 and 2012, from 20 to 25 percent of workers reported that the age at which they expected to retire increased in the past year. Since that time, however, fewer workers have reported postponing the age at which they expect to retire. Only 13 percent of workers report increasing the age at which they expect to retire in the past year, compared with 22 percent in the 2013 RCS.

Workers planning to delay retirement gave the following reasons:

The poor economy (25 percent).

Inadequate finances or can’t afford to retire (18 percent).

A change in employment situation (17 percent).

Needing to pay for health care costs (12 percent).

Lack of faith in Social Security or government (9 percent).

Higher-than-expected cost of living (9 percent).

But the 2015 RCS also found that one in two Americans who planned on working longer found themselves retiring unexpectedly due to a hardship such as a health problem or disability (60 percent), though some said they retired early because they could afford to do so (31 percent).

This tendency to retire earlier than planned may explain the considerable gap that exists between workers’ expectations and retirees’ experience.

“Workers still expect to work longer to make up for any savings shortfalls. However, many retirees continue to report that they retired before they expected to due to an illness or disability, needing to care for others, or because of a change at their job,” said Craig Copeland, senior research associate at EBRI and co-author of the study. “Consequently, relying on working longer is not a solid strategy for retirement preparedness.”

Income Expectations

More than half (56 percent) of workers expect to be able to manage in retirement with no more than 70 percent of their pre-retirement income. This ratio appears to be in line with retirees’ reported experience: 57 percent of retirees say their income in retirement is no more than 70 percent of their pre-retirement income.

Employees expect to draw income from a wide variety of sources, including from an employer-sponsored retirement savings plan (74 percent), an individual retirement account (69 percent), and other personal savings and investments (66 percent). Seventy-three percent expect part-time employment to provide them with a source of income in retirement, and 55 percent expect to receive income from an employer-sponsored traditional pension or cash balance plan.

In contrast to workers, retirees are less likely to expect to rely on personal savings or part-time earnings for their income in retirement, highlighting the importance of saving through workplace retirement plans while employees have the opportunity to do so.

Another Look: Aging Workers Can’t — or Won’t — Retire

New research findings from the Transamerica Center for Retirement Studies (TCRS), released May 5, 2015, revealed that one in five U.S. employees expects to continue working as long as possible in their current or similar position until they cannot work anymore, while 41 percent envision transitioning into retirement by reducing their hours to allow for more leisure time.

“American workers’ vision of transitioning into and working in retirement sounds like a practical approach that can bring income and benefits, address savings shortfalls and provide opportunities for staying active and involved,” said TCRS President Catherine Collinson. “However, the implications for lawmakers and employers are profound and require updating public policy and employment practices.”

Stephen Miller, CEBS, is an online editor/manager for SHRM. Follow him on Twitter @SHRMsmiller.

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