Key Takeaways:
– 27% of U.S. workers plan to work in retirement to supplement their income.
– Unexpected factors like health complications or layoffs might upset late retirement plans.
– Many American workers retire nearly five years earlier than planned.
– A significant number of people, 35%, retired early due to hardships such as health issues.
– The benefits of working longer include delayed drawing from savings and increased Social Security benefits.
Escaping Old Age Reservations May Not Be Easy for Many
Almost 27% of American employees intend to keep working during their retirement to supplement their income, a recent survey by CNBC and SurveyMonkey has revealed. The survey involved 6,657 U.S. adults, including both retirees and those currently working, self-employed, or running a business.
Despite the fact that working longer can be among the best ways to safeguard one’s finances for old age, retirement experts warn that such plans could be derailed by unexpected health problems or job loss. As Philip Chao, the founder of Experiential Wealth explains, reality often turns out to be very different from the dream of comfortable late retirement.
Early Retirement: More Common Than Expected
Research indicates that Americans often retire earlier than they anticipate. The gap between expected and actual retirement age has consistently been around five years since the early 2000s according to Gallup polls. For instance, the expected retirement age in 2023 averaged at 66 years, while the average retiree retired at 62.
Accompanying this finding, the Employee Benefit Research Institute (EBRI) reveals that a substantial 46% of retirees leave the workforce sooner than planned. Despite one-third of workers expecting to work till the age of 70 or beyond, only 6% managed to do so.
The Nonexistent ‘Escape Valve’
Many view late retirement as an escape route from financial instability – an idea that might not hold in reality, cautions Chao. Adhering to this notion could lead to unwisely assuming one can work late into their retirement, which for many could prove recklessly dangerous.
Indeed, 35% among the survey respondents who retired earlier than planned did so due to a hardship such as a health problem or disability. Moreover, 31% left their work early due to company changes such as layoffs.
The Impact of Unplanned Job Loss
More than half, 56%, of full-time workers in their early 50s are forced to quit their jobs due to layoffs or other circumstances. Often, these workers earn significantly less if they find another job.
On a more positive note, 35% of people retired earlier than anticipated because they could afford to.
Potential Benefits of Working Longer
If retirement can be delayed, it brings several financial benefits. Employees can delay spending their savings, allowing their nest egg to grow. Delaying entitlement to Social Security benefits can also increase these.
Non-financial perks of continuing work include improved health and longevity, although these can depend on job related strain and physical labor demands. About 26% of workers plan to work in retirement because they enjoy it, and a growing number of older employees see this possibility as a feasible option. As Jeffrey Jones, a Gallup analyst, observes, a trend towards service and information providing roles increases the potential for working into older age.