Retirement for self-employed Americans looks different than retirement for others, according to a recent study by Transamerica Center for Retirement Studies (TCRS), part of an institute that receives funding from Transamerica Life Insurance Company. In fact, the self-employed are less likely than workers at an employer to be looking forward to retirement and many plan to continue working, despite being retired, according to the study.
Of the study participants, 63% of self-employed workers are looking forward to retirement, compared with 72% of workers at an employer. In fact, it won’t be too hard for advisors to convince the self-employed to wait a few years before collecting retirement benefits: 68% of self-employed workers expect to retire after age 65 or not at all, the study noted, compared with 54% of workers at an employer.
"The self-employed are enjoying life,” said Catherine Collinson, CEO and president of Transamerica Institute and TCRS. “Given the autonomy and flexibility in their work situations, the concept of retirement is less relevant to them and not necessarily something they aspire to.”
Healthy aging, not necessarily financial need, is a factor in self-employed continuing to work after they turn 65. More than eight in 10 self-employed who want to continue working said they felt that way because of the activeness and alertness that comes with working, compared with about seven in 10 saying they wanted to continue working for financial reasons. In fact, self-employed workers are less likely than workers at an employer to cite financial reasons for their continuing to work after turning 65.
Over half of self-employed workers say they consistently save for retirement, but a minority—15%—say they never save for retirement. Of those that do, the median savings rate is 15% of their annual income.
For advisors, there are opportunities for guidance in tax planning, long-term-care needs, estate planning and contingency care, factors that less than four in 10 self-employed have factored into their retirement needs. Among business owners, only 26% have weighed in an exit strategy for their business.