Americans are prepared to say goodbye to retirement: Financial survey

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This includes the American retirement sector according to one study by Milwaukee-based financial service company, Northwestern Mutual, which has shown that adults age 18 and over don’t plan to stop working when they reach retirement age.

Northwestern Mutual’s 2019 Planning & Progress Study surveyed the economic outlook and behavior of U.S. adults and found that 46 percent of Americans expect to work past the traditional retirement age of 65. 

Baby Boomers and Generation X participants responded to the survey with identical outlooks percentage-wise. Eighteen percent of both groups reported they expect to work past the age of 74—which is equivalent to nearly one out five respondents.

Conversely, 53% of Americans who said they expect to work past the age of 65 have noted that it will be by choice. This is slightly higher than the 47% who reported they expect to beyond retirement age out of necessity.

Working by choice vs. Working out of necessity

The candidates in this study who answered that they expect to work past the age of 65 by choice listed these top three reasons on why they think this way:

  • 58 percent believe they will still enjoy their career by age 65 and wish to continue at the time of this study.
  • 46 percent believe they will want additional disposable income.
  • 39 percent believe working is a social outlet that will help them stay active and prevent boredom.

The candidates in this study who answered that they expect to work past the age of 65 out of necessity listed these top three reasons on why they think this way:

  • 78 percent believe they won’t have enough money saved to retire comfortably.
  • 56 percent believe funds from Social Security will not take care of their needs.
  • 49 percent believe the rising costs of health care are a cause for concern when it comes to retirement.

Why are opinions so different?

Northwestern Mutual cited a lack of savings and financial preparedness as a leading cause. The study found that nearly a third of American adults at age 18 and above are “within three paychecks of needing to either borrow money or skip paying one or more bills.”

It also found that more than a fifth of Americans have less than $5,000 saved for retirement. Fifteen percent of that group have no retirement savings at all.

These numbers indeed paint a disconcerting picture as the study suggested, however, Northwestern Mutual points out that the findings in 2019 are an improvement from last year. In 2018, more than a third reported having less than $5,000 saved and 21 percent from that group had no retirement savings.

Moreover, the study asserted that nearly half of its respondents believe their savings won’t last. “On average, people think there is a 45 percent chance they will outlive their savings, and 41 percent have taken no steps to address it,” the study said.

When it comes to the savings of Baby Boomers, the study found that 17% have less than $5,000 saved for retirement, and 20% have less than $5,000 in their personal savings. The study juxtaposed these findings with metrics from the Pew Research Center, which estimates that 10,000 Baby Boomers hit the milestone age of 65 every day.

Likewise, the study found that Generation X is in a similar situation, but its numbers are greater. Twenty-one percent have less than $5,000 saved for retirement, and 22 percent have less than $5,000 in their personal savings.

Additional factors the study cited include its finding that 56 percent of Americans don’t know how much money they’ll actually need to retire comfortably, and 22 percent of working adults being unsure of whether Social Security will be available to them when they retire.

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This 2019 Planning & Progress Study from Northwestern Mutual is an update to its initial data set released in May.

Aside from opposing views when it comes to retirement and savings, the study uncovered trends that show U.S. adults over the age of 35 feel their financial habits and financial security have improved in the last 10 years. Though, it also noted that risk aversion appears to run high while financial optimism remains flat.