Puzzle pieces that say 'retire' and 'plan'

Behavior

Retirement Dates Don’t Always Fit Plan

Today, half of U.S. workers say they want to work past age 65 – in the 1990s, only 16 percent did.

Apparently, people are getting the message that, if they want to be comfortable in retirement, they will need to work as long as possible.  However, good intentions don’t pan out for more a third of workers closing in on retirement age. And the older the age they had planned to retire, the more they fall short of the goal.

Researchers at the Center for Retirement Research, which sponsors this blog, wanted to uncover why people do not follow through. Their study was based on a survey that asked people in their late 50s when they planned to retire and then watched them over the next several years to see what they did and why.

Two factors – the researchers call them shocks – play important roles in pushing people to retire early. The big factor is health. One health-related reason is intuitive: when older people develop a new condition, they become more likely to retire earlier than they’d planned. A second reason is that, when setting a date, they over-estimate how long they’ll be able to work if they have already developed health conditions like arthritis, heart disease, or emphysema.

In this study, a shock is important if it clearly pushes older people to retire, and it affects a lot of them. Several shocks failed one of the two criteria. For example, even though the death of a spouse can prompt retirement, relatively few people experienced this, mitigating its impact.

Early retirement can also happen by default, which occurs when someone loses a job and is unable to find a new one. But another type of employment change has the opposite effect: older people are more likely to keep working if they lose one job but find another.

This study provides only a partial explanation for why so many people decide to retire prematurely. A compelling motivation the researchers didn’t consider is the desire for more leisure time.

To read the entire study, authored by Alicia Munnell, Geoff Sanzenbacher, and Matt Rutledge, see “What Causes Workers to Retire before They Plan?”

The research reported herein was performed pursuant to a grant from the U.S. Social Security Administration (SSA) funded as part of the Retirement Research Consortium. The opinions and conclusions expressed are solely those of the author(s) and do not represent the opinions or policy of SSA or any agency of the federal government. Neither the United States Government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of the contents of this report. Reference herein to any specific commercial product, process or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply endorsement, recommendation or favoring by the United States Government or any agency thereof.

2 Responses to Retirement Dates Don’t Always Fit Plan

  1. Mike Mas. says:

    There’s an old saying, “If you want to make God laugh, tell him your plans.” I have known too many people who have either passed prematurely (despite healthy lifestyles), or have suffered from career-ending accidents. There are also “industry risks.” My dad had a job for life with a major railroad, and I had the same deal with a newspaper. Guess what, both companies ultimately went bankrupt! I don’t mean to be morbid, but suggest that while you hope for the best, please consider and plan for the unexpected. Your retirement date isn’t always up to you.

    • Mike says:

      Another point to reflect upon is that while our intention is to work beyond age 65, when we finally get there we may find our body is somewhat unwilling to play along, and each week is harder to complete as we age. Sooner or later we give in to the inevitable and retire, in whatever form that might be.

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