October 27 2009 - The latest 'UnretirementSM Index' published by the US arm of Sun Life International reveals that 65% of American employees expect to delay their retirement by at least a year - 11% more than at the end of 2008. Moreover, 27% of US workers believe that they will have to work at least an extra 5 years past the traditional retirement age of 67 because of the economic climate.
Sun Life defines 'unretirement' as working at least 20 hours a week after the age of eligibility for Social Security benefits. While 55% of respondents said they intended to work full- or part-time at the age of 67, 28% of US workers (a record high in the survey) of all age groups planned to work full time past 67. The study also shows that only 28% of working Americans feel very confident that they have done a good job preparing for retirement and a mere 22% are very confident that they can take care of medical expenses. Just 40% are very confident of having enough money for basic living expenses in retirement and, overall, fewer than a quarter of employees are very confident they will be able to live the kind of life they want as retirees.
Wes Thompson, President of Sun Life Financial U.S. said:
"Our latest Unretirement Index results show a watershed transformation over the past year in the way people regard work and retirement. The notion of Unretirement has become a reality for a majority of workers who increasingly see working in their later years as a necessity instead of a luxury. The Unretirement Index also shows how lower levels of confidence are affecting the American psyche and psychologically explain why Americans are making these decisions that impact our society."
Last year, 'to stay mentally engaged' was the top reason cited for working past 67. This year, 84% of respondents cited "to earn enough money to live well". However, "staying mentally engaged" still featured strongly (81%), followed by "I love my career" (65%), and "for health care benefits"(63%).
Living Longer, Working Longer
People in developed countries are living longer and many are working well past traditional retirement age. Some are even returning to work after "retiring" and/or opting for "portfolios" of paid and volunteer positions, according a 2006 MetLife Mature Market Institute® study, Living Longer, Working Longer: The Changing Landscape of the Aging Workforce, conducted by David DeLong & Associates, Inc. and Zogby International.
"Today, older workers view retirement as a desirable state, not a particular date," said Dr. David DeLong, author of Lost Knowledge: Confronting the Threat of an Aging Workforce and a research fellow at the MIT AgeLab. "When we conducted the study, we found that mature workers are struggling to balance the conflicting pressures of income security, post-retirement-age employment and, often, age discrimination - perceived or real - as they look for a sense of security and meaning during their 'retirement' years."
This study is unusual in that it examines the actual work experiences of 2719 employees aged 55-70 whereas most other studies offer predictions of aging Baby Boomers' retirement expectations. The MetLife study shows that the following percentages of respondents are working or looking for work:
- 78% of respondents age 55-59
- 60% of 60-65 year-olds, and
- 37% of 66-70 year-olds
Around 15% of employees across all three age groups, have accepted retirement benefits from previous employers, but have chosen to return to work (or are looking for work). These "working retired," represent:
- 11% of 55-59 year-olds
- 16% of 60-65 year-olds
- 19% of 66-70 year-olds
Motivations to Work
There are significant differences between age groups when it comes to the motivation to work. Employees aged 55-59 cited economic incentives as the major motive, with 72% of this group saying that "need income to live on" was their primary reason for working. 60% of 60-65 year-olds also cited this as their main motivation, followed by a desire to "stay active and engaged" (54%) and "do meaningful work" (43%). However, 72% of 66-70 year-olds cited the desire to "stay active and engaged" as their primary reason to work, followed by "the opportunity to do meaningful work" (47%) and "social interaction with colleagues" (42%).
What does 'retirement' mean?
Respondents in the MetLife study cited the following definitions of retirement:
- "freedom from the demands of work" (26%)
- "more control over one's personal time" (24%)
- "limited financial concerns" (21%)
- "the ability to pursue other opportunities"
"As organizations seek to attract and retain older workers, they must be careful not to lump all 'older workers' into the same category - it's important to differentiate the work experiences and motivations of these employees. While some may be working for financial reasons, others place a special premium on feeling engaged and doing work that means something," says Sandra Timmermann, Ed.D., gerontologist and director of the MetLife Mature Market Institute. "Recruiting and retaining older workers requires careful consideration of job design, work environment, and creating new and challenging opportunities."
What motivates the "Working Retired"
20% of Working Retireds age 60-65 said they "wanted to try something new and different". However, this option was cited by only 12% of 55-59 year-olds and 7% of 66-70 year-olds. 19% of 66-70 year-olds cited "becoming self-employed or starting a business" compared to 7% of 60-65 year-olds and 8% of 55-59 year-olds.
28% of respondents aged 55-59 said they were "self-employed or business owner." This increased to 36% of 60-65 year-olds and 42% of 66-70 year-olds.
"Clearly, these findings suggest there are conditions in the job market and in older workers' desire for autonomy and flexibility that make self-employment an attractive option for those in their late sixties," said Dr. DeLong. "As the oldest Boomers turn 60 in 2006, their desire for autonomy and trying new things could portend a significant wave of departures in the next five years. Employers will need to identify ways to retain the valuable knowledge of these workers."
Financial necessity underlies the need to work for many older employees. 18% of Baby Boom workers aged 55-59 said that they expected to have no access to retirement benefits (e.g., pension, 401(k), SEP) and are likely to feel compelled to work beyond traditional retirement age. 14% of those aged 60-65 and 10% aged 66-70 expected to receive nothing but Social Security when they finally cease working.
"Retirement experts have been predicting for years the serious repercussions that will arise as Baby Boomers' lack of retirement assets collides with their increased longevity to create widespread economic hardship. The rational solution - to continue working full-time beyond traditional retirement age - is at odds with many Boomers' interests, values and priorities for their retirement," notes Dr. Timmermann.
Some other survey findings
- Age Discrimination Older workers frequently cited "age bias" as a reason for unsuccessful job searches, including:
- 39% of 55-59 year-olds
- 42% of 60-65 year-olds
- 60% of 66-70 year-olds
- Preference for Part-Time Work Of those still in employment, 76% of 55-59 year-olds worked more than 35 hours a week, compared to only 39% of 66-70 year-olds.
- Portfolio Work Interviews were also conducted for the study, in which some older employees said their lives had taken on a "portfolio quality" - mixing part-time paid work, volunteer work, and travel, together with more time for hobbies and family. In fact, 25% of survey respondents across all age groups had more than one paid job with about 20% of those working having two jobs, and another 4% having three jobs.