Planning to Work Forever Isn’t a Savings Strategy

1 in 4 U.S. employees expect to work beyond age 70

By Stephen Miller, CEBS Jun 3, 2016

Many workers who feel compelled to stay on the job past the traditional retirement age are less healthy, more stressed and more likely to feel stuck in their jobs than those who expect to retire earlier. And they now represent a significant portion of the workforce: Roughly 1 in 4 U.S. workers believe they won’t be able to retire until after age 70, if at all, according to a survey by consultancy Willis Towers Watson.

Findings released June 2 from the firm’s Global Benefits Attitudes Survey of nearly 5,100 U.S. workers found that 23 percent believe they’ll have to work past age 70 to live comfortably in retirement; another 5 percent don’t think they’ll ever be able to retire. That’s a sign that employer-provided savings vehicles such as 401(k) plans—which almost 8 in 10 workers pointed to as the primary way they’re saving for retirement—are not being used effectively.

The expectation of working past the traditional retirement age due to necessity, not choice, often takes a toll on workers. Among all adult, private-sector employees who said they would not be able to retire before age 70:

40 percent indicated they have high or above-average stress levels, compared with 30 percent of employees expecting to retire at 65.

Less than half (47 percent) said they are in very good health, while nearly two-thirds (63 percent) of those planning to retire at age 65 said they are in very good health.

40 percent felt they are stuck in their jobs, compared with about a quarter of employees who expect to either retire at 65 (28 percent) or before 65 (27 percent).

“Although their financial situation has improved over the past few years, many workers remain worried about their long-term financial stability,” said Steven Nyce, a senior economist at Willis Towers Watson in Arlington, Va. “The only way for many employees to achieve retirement security and overcome inadequate savings is to work longer.” To avoid this situation, “employees are increasingly looking to their employers for help” with financial management and retirement planning.

Sixty-two percent of respondents said they would be willing to pay more out of their paychecks for more generous retirement benefits. That they haven’t yet done so suggests that inertia may be keeping many from saving enough today to ensure their retirement years are secure. Similarly, a May 2016 Federal Reserve study of household economics and decision-making showed that a sizeable number of U.S. workers (16 percent) said they intend to invest through a workplace retirement plan but haven’t yet signed up—suggesting they might benefit from automatic enrollment in their workplace plans.

“With the vast majority of workers counting on their employer’s retirement plan as the primary way they save for retirement, employers have plenty of motivation to act,” said Shane Bartling, senior retirement consultant at Willis Towers Watson in San Francisco. Employers should take this opportunity to provide personalized decision-making support and recalibrate automatic plan enrollment and automatic escalation rates, he advised, “to close the gaps in employee understanding about savings amount required and costs in retirement.”

Not Saving Enough Starts Early

In a recent survey, 68 percent of Millennials who are eligible to participate in their workplace 401(k) plans don’t, financial firm T. Rowe Price found. College debt is part of the explanation: The median amount owed on student loans was $20,000 for Millennial women and $14,000 for Millennial men.

Rising rents and increasing student loan debt were cited as key reasons why Class of 2015 graduates expect to work to age 75, according to a study by financial advice site NerdWallet, which noted that “the two most important things Millennials can do [to prepare for retirement] is save more and save early” when possible by at least “contributing enough to their 401(k) to grab all matching dollars offered by their employer.”

While that may be easier said than done for many who feel cash-strapped, automatic enrollment and auto escalation plan features—along with employer-provided financial wellness advice and, increasingly, assistance with student loans and aid with other debt repayment—can help ensure that workers who are young today won’t find themselves “retiring in place,” while still at work, decades from now.

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


Job Finder

Find an HR Job Near You
Post a Job

Apply by October 19

Get recognized as an HR expert. Earn your SHRM-CP and SHRM-SCP certification, and set yourself apart.

Apply Now


Find the Right Vendor for Your HR Needs

SHRM’s HR Vendor Directory contains over 10,000 companies

Search & Connect