Earlier this month, Transamerica released their annual retirement survey of workers titled “Retirement Throughout the Ages: Expectations and Preparations of American Workers.” It’s a truly massive compendium, weighing in at roughly 80 pages long, so there’s a great deal of information to unpack, and I encourage everyone to check it out for themselves. That being said, not everyone has the time to wade through 80 pages of statistics, so I’d like to highlight one of the more interesting aspects that I came across, namely, the changing definition of “retirement.”
The survey notes that the U.S. retirement system has long been based around three main sources of income: Social Security, employer retirement benefits and personal savings, however, their results indicate that today’s worker are expecting to draw their retirement incomes from a significantly more diverse set of sources. The big three still weigh heavily, of course, and represent the three most common responses, but what’s truly interesting is the fourth response. Thirty one percent of respondents listed “Working” as a prospective source of income during retirement. Further, when asked about their prospective primary source of income in retirement, 13 percent chose “Working.” You’re not reading that wrong, roughly 1 in 7 respondents plan to fund their retirements primarily through continuing to work. This is no mere blip; in fact, it’s a growing sentiment that we’ve actually seen before. The concept of retirement as a time when someone completely stops working to live a life of leisure is basically dead. Only 14 percent of respondents anticipated that particular scenario for themselves.
If retirement as we knew it is dying, then what’s killing it? Why are people continuing to work until they drop? According to the survey, people in their thirties, forties, fifties and sixties cited in similar numbers (roughly 60 - 65 percent for each group) that their primary reasons for continuing to work in retirement were income and benefit related. Interestingly, however, those in their twenties, and sixties and over heavily cited enjoyment-related reason for their continued toil (roughly 40 percent). One may be tempted to attribute this disparity in motivation to those groups in the middle age ranges being hit hardest by the Great Recession. However, the survey disputes that particular claim, as 77 percent of respondents claim that they’re recovering currently from or simply weren’t affected at all by the recession. And, while those in their forties (18 percent) and fifties (16 percent) were the most likely to claim they’d never recover, the pessimists represent a relatively low percentage.
Attitudes are simply changing, with workers viewing retirement less as a hard stop and more as something to be eased into. Forty one percent of respondents (across all ages) envision transitioning into retirement by reducing their current hours to create more leisure time to enjoy life or by working in a different, less demanding capacity that may bring greater personal satisfaction. Many stated that they planned on remaining with their current employer even as they cut back their hours and eased into retirement. However, there may be some self-delusion at play here, as far fewer respondents (basically half) noted that their employers offer opportunities to shift to part-time or work in a different, less demanding or more satisfying, position. This disconnect is something to keep an eye on going forward, as if employer attitudes towards retirement don’t evolve alongside those of their employees, then disaster may be on the horizon for many workers. Make sure that your clients appreciate the reality that while attitudes may change quickly (retirement is dying), institutional change is often glacially slow (long live retirement).