According to new figures published in the Northwestern Mutual 2014 Planning and Progress Study, 13% of working adults believe they will never be able to retire and will continue to work until the age of 86. If accurate, this would mean the average age of retirement would increase by a decade.
The study itself surveyed over 2000 adults of varying ages, gender, race/ethnicities, education levels and incomes, finding that the majority of the subjects were worried about costs of retirement and therefore expecting to work as long as possible to maintain themselves. According to Rebekah Barsch, vice president at Northwestern Mutual,
We continue to be surprised and nervous from a planning angle because …there’s a disconnect between expectations about how long they will work.”
While many plan to work until late in life, and therefore save accordingly, there is a high probability that the they will not work for as long as they believe they will. For example, those ages 55 and older laid off during the recent recession were likely to not find re-employment. Event less dramatic life experiences may convince many to cut their working expectancies short, such as increasing fatigue or a desire to spend more time with the family. Therefore, a person planning to retire at 86 but actually does so at 76 has ten extra years of retirement to pay for, on top to missing out on the expected income of the next ten years.
According to the study, the baby boomer generation (ages 40-59) are the least financially disciplined and therefore the most at risk of under saving. Surveys indicate frequently cited reasons for not saving include lack of time, too many distractions, and complexities involved in building a nest egg.
Researchers suggest a better way to plan for retirement is to save as if planning to retire at age 59. They also say it is never too early or too late to start saving.
Read more here- “Working Longer: Not the Best Retirement Savings Plan,” (Gail Buckner, Fox Business)