Many plan to work in retirement for additional income, to keep benefits
More than one-third (35 per cent) of pre-retirees in the United States do not expect to retire, up from 29 per cent in 2009, according to a survey by the Society of Actuaries (SOA).
Eighty-nine per cent of pre-retirees are planning to work in retirement and 77 per cent of retirees already do so, found the 2011 Risks and Process of Retirement Survey.
Although the majority of pre-retirees as well as retirees say the desire to stay active and engaged is a reason to work in retirement, financial concerns also play a critical role in the decision. More than four in 10 pre-retirees, who do not expect to retire, say it is because they are financially unable to do so (45 per cent).
Of the respondents with financial concerns, many indicated they planned to work in retirement because they wanted:
•additional income (74 per cent of retirees; 87 per cent of pre-retirees)
•to preserve or build up assets (59 per cent of retirees; 80 per cent of pre-retirees)
•to keep employee benefits (33 per cent of retirees currently working in retirement; 61 per cent of pre-retirees).
“Current trends in retirement indicate that people may need to work longer than they originally planned,” said actuary and retirement expert Carol Bogosian. “Individuals often have a difficult time estimating how long they can expect to live, how much they will earn on their investments and how much they can spend each year to avoid running out of money. In fact, many people are just guessing about how much money they will need in retirement.”
While many pre-retirees are planning to work in retirement, those who eventually expect to retire think they will work longer than current retirees actually did. While one-half of retirees report they retired before age 60 (51 per cent), just one in 10 pre-retirees think they will retire that early (12 per cent). Instead, one-half of pre-retirees expecting to retire say they will wait at least until age 65 to do so, found the survey.
“There is a big gap in the age at which pre-retirees expect to retire and actual retirement ages of those who have retired from their primary occupation,” Bogosian said. “This may be partially due to involuntary retirement and health problems. This gap, together with the failure of many people to plan for a long enough retirement period, may indicate significant future financial problems for many.”
Other survey highlights:
•Fifty per cent of retirees who work in retirement find employment with a company other than the one that employed them pre-retirement, while only 29 per cent report working for the same company as before retirement.
•Forty per cent said they used entirely different skills in their post-retirement employment, while 39 per cent of pre-retirees also plan to rely on other skills.
•Twenty-two per cent of retirees working in retirement indicate they started a small business or became self-employed when they retired. Similarly, 31 per cent of pre-retirees who plan to retire say they will start a small business.