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CCH® PENSION — 1/12/12

Surveys Find Weak Economic Outlook Leads Workers To Delay Retirement

from Spencer’s Benefits Reports: Slightly fewer than 15 percent of older Americans (those age 50 and older) now expect to retire at age 70, up from 11.2 percent in 2006, according to the Employee Benefit Research Institute. The study, Retirement Age Expectations of Older Americans Between 2006 and 2010, published in the December 2011 EBRI Notes, also noted that even at higher ages, the expected retirement age has jumped: just 1.7 percent of workers age 50 or over planned to retire at age 80 in 2006, while that figure more than tripled to 5.2 percent in 2010. The study suggests that this is due to the economic recession.

In addition, in 2008, during the recession, 22.4 percent of workers age 50 or older said they never plan to retire, according to EBRI. That declined to 16.3 percent in 2010. Over the 2006–2010 period, another 14 to 18 percent of workers said they do not know when they will retire.

“The general trend shows that older Americans are expecting to retire later,” said Sudipto Banerjee, EBRI research associate. “But the most striking finding is that nearly 20 percent of survey respondents expects never to stop working and more than 15 percent don’t know when they are going to retire.”

Allstate Survey

In response to the weak economy, near-retirees, on average, expect to retire six years later than the age at which current retirees did, according to the 11th quarterly Allstate-National Journal Heartland Monitor Poll. More than two-thirds of Baby Boomers (68 percent) expect to work in some form after retirement—about half say due to necessity—while only 11 percent of current retirees report that they work.

“The impact of the recession on the middle class is larger than past recessions,” said Thomas J. Wilson, Allstate chairman, president, and chief executive officer. “Not only is long-term unemployment at record levels, but Baby Boomers now say they will have to retire six years later than previous retirees. Sandwiched between the happily retired and the optimistic young, these near-retirees feel the pain of their declining home values and retirement savings and expect to work until 66 years of age. This profound decline in Baby Boomers’ retirement expectations has significant public policy and private market implications.”

According to the poll, near-retirees have different expectations about the sources of their retirement income and their financial security in retirement than current retirees do. Both groups express a similar reliance on Social Security: 68 percent of retirees say it is a major source of income, and 62 percent of near-retirees expect it to be. However, more than half (52 percent) of current retirees cite a pension as a major income source, while only 37 percent of near-retirees expect the same. Meanwhile, 34 percent of near-retirees expect part-time work to be a major income source, while only 8 percent of current retirees report part-time work due to economic necessity. While 79 percent of current retirees say they are confident about their retirement security, including 33 percent who are “very confident,” only 67 percent of near-retirees say the same, and only 19 percent say they are “very confident.”

Key findings from the 11th Allstate-National Journal Heartland Monitor Poll include the following:

1) Many Americans feel the pain as the recession continues to be a game-changer—and delays Baby Boomer retirements—while current retirees and younger Americans firmly believe they will be able to enjoy retirement.
• Near-retirees (Baby Boomers aged 50 and older who are not yet retired) expect to retire, on average, at the age of 66. Current retirees retired at 60, on average—which is about when younger Americans (the Millennial generation, ages 18-29) expect to retire.
• Only 27 percent of near-retirees expect their retirement to be more secure than their parents’ retirement, and 47 percent expect it to be less secure. In addition, 42 percent of current retirees say their retirement is more secure than their parents’ was, and only 17 percent say it is less secure.
• Only 25 percent of near-retirees expect their retirement to be more comfortable than their parents’ retirement, and 39 percent expect it to be less comfortable. The survey also found that 47 percent of current retirees say their retirement is more comfortable than their parents’ was, and only 19 percent say it is less comfortable.
• Nearly 70 percent of near-retirees say it is very or somewhat likely that they will continue to work in some form. Only 11 percent of current retirees say they still work.


2) With the exception of Social Security, near-retirees have different expectations than current retirees about their sources of income and financial security in retirement.
• Social Security is a major income source for 68 percent of current retirees, and a similar 62 percent of Baby Boomer near-retirees say they expect it to be a major income source.
• A monthly pension is a major income source for 52 percent of current retirees, but only 37 percent of near-retirees expect the same.
• 401(k)s are a major income source for 16 percent of current retirees and are expected to be a major source for 39 percent of near-retirees.
• IRAs are a major income source for 18 percent of current retirees and are expected to be a major source for 27 percent of near-retirees.
• Income from part-time work is a major income source for just 8 percent of current retirees and is expected to be a major source for 34 percent of near-retirees.
• The poll found that 79 percent of current retirees said they were “very” or “somewhat” confident they have enough money to provide a secure retirement, while only 67 percent of near-retirees expressed the same level of confidence.


3) Near-retirees overwhelmingly support the traditional Medicare system over a voucher system, including a strong majority of Republicans.
• Just 2 percent support the current Medicare system of direct payments to doctors. Only 17 percent support conversion of Medicare to a program that provides seniors with a fixed sum of money to purchase their own insurance. In addition, 58 percent of Republican near-retirees support continuation of the current system.

The survey, conducted from November 30 through December 4, 2011, includes responses of a nationally representative sample of American adults with an oversampling of 200 adults age 50 and older.

For more information on the EBRI survey, visit http://www.ebri.org. For more information on the Allstate-National Journal Heartland Monitor Poll, visit http://www.allstate.com/heartland-monitor.