Working longer than expected isn’t only a theory—a whopping 23% decline in “expected age to retire” answer.
Working longer than expected has seen a dramatic increase since the economic free fall in 2008.
The Great Recession may be over but it continues to take a toll—in the number workers over 60 who will stay in their jobs longer rather than retire as planned.
The Great Recession changed retirement expectations drastically from a study done in September 2008 before the financial crisis hit the country, says Sudipto Banerjee, a research associate with the Employee Benefit Research Institute in studying the issue.
Before the start of the recession, 72.4 percent of workers retired either before or no more than a year after they’re expected retirement, Banerjee says. The recession dropped that number to 49.6 percent since then—an astonishing 23 percent decline.
Banerjee says studies done prior to the Great Recession showed there was already trend that people were staying longer in the workforce. Many people had been doing so because either they want to work longer or just making up for their lack of retirement savings.
“This shows that there’s been a big increase in later-than-expected retirements following the recession,” Banerjee says. “This is a direct reflection of the recession and the shock that people had. With the huge market crash, people saw the effect on their retirement savings—401(k)s, IRAs. There was a huge loss in their portfolios, and they thought they didn’t have enough money to retire.”
Banerjee says the study finds that 55.2 percent of these workers retired within three years of their expected retirement. That’s either before or after the date they had in mind, he says.
That breaks down to 38 percent retiring before they expected and 48 percent retiring after they expected. Another 14 percent retired the year they expected to retire, Banerjee says.
In addition, the study shows 35.9 percent retired after 65 than the 18.9 percent who expected to do so. Of those who expected to retire after 65, some 56.6 percent expected to do so, he says.
If people are working after age 65, it’s more likely to be part time, Banerjee says.
As of 2012, he says the probability of working full time after age 65 was 48.7 percent for men and 46 percent for women.
“I think we will see some lowering of the spike but that remains to be seen,” Banerjee says. “But I expect we will stay with the long-term trend we have been seeing since the mid-1990s that people are staying longer.”
What helps people retire closer to the date they expected is having a retirement plan, Banerjee says.
The data comes from a retirement study of the University of Michigan’s Health and Retirement Study sponsored by the National Institute on Aging, he says.