In today's gig economy, very few workers enjoy pensions or defined-benefit plans. When it comes to saving for retirement, many Americans are forced to fend for themselves. Enjoying our ever-lengthening lifespans means that we need even more money to sustain us during our golden years.
"We are living longer, and we all know it," says Certified Financial Planner Brett Anderson, President of St. Croix Advisors in Hudson, Wisconsin. "Therefore, we will either need to save more today or work longer. It's simple math."
In an exclusive MoneyTips online survey, 452 Americans were asked about retirement. In a previous article, we explored why people retired earlier than planned. But is it really retirement if you're still working?
We asked the subjects yet to retire:
In all, less than half of the people surveyed yet to retire (46.9%) were confident that they could stop working at some point, while the majority were not sure (30.9%) or not confident (22.2%). Not surprisingly, income played a role in the financial confidence level. Only about 1 of 3 (34.3%) of those from families earning $50,000 or less annually were confident they would be able to stop working completely, as compared to more than 3 out of 5 (61.2%) of those earning over $100,000 a year.
Says Brian Saranovitz, co-founder and president of Your Retirement Advisor, "I would agree that about half of the clients I see feel confident in their ability to stop working and retire completely. However, most of them have not fully analyzed when they can retire and how long their nest eggs will last. We encourage everyone to run a retirement income projection to bolster their confidence and to help choose that full retirement date.
"The other half of my new clients don't know when or if they can retire," admits Saranovitz. "While many want to work at least part time in retirement (to stay active, to earn some extra income or for personal fulfillment), they have no idea how long their savings will last, nor do they understand the impact of various risks they may face in retirement (such as long-term care, medical, taxes and inflation)."
We also asked:
In retirement, 4 out of 9 (44.3%) want to work; while more than 3 out of 9 (36.1%) hope they won't have to work. Less than 1 in 13 overall (7.2%) believed they wouldn't work during life's last chapter. When we broke it down by gender, we found more than 1 in 10 women (10.1%) believed they would not work in retirement, compared to less than 1 in 28 men (3.5%).
"Some people that have diligently saved a significant amount over the years won't have to work in retirement. Others will have to plan carefully, utilizing all resources available and work part time before retiring completely," says Saranovitz, a financial advisor based in Leominster, Massachusetts.
Nevertheless, just because you desire or your finances require that you work doesn't mean that you'll actually get that opportunity. We surveyed current retirees about their work status, asking:
Overall, more than 1 in 3 (35.3%) retirees planned to work. The good news: less than 1 in 20 (4.8%) who didn't plan to nevertheless find themselves working for pay. The bad news: more than 2 out of 3 (69.2%) of those who planned to work for pay aren't! It's even worse for women, as nearly 3 out of 4 surveyed (74.0%) who planned on working are not.
Noted Saranovitz, "As evidenced in the above, many people who plan to work in retirement don't end up working (for a variety of reasons). Therefore, it's important in your pre-retiree planning to do projections with and without a job because you never know what life has in store.... The best laid plans..."
Finally, we asked people yet to retire:
While most respondents planned to retire in their 60's, more than 1 out of 8 (13.9%) predicted they wouldn't retire until they dropped dead!
"I find that most people I meet with plan to retire between 65 and 70," says Saranovitz. "But many people really don't understand the vast intricacies of what they need to do to be financially successful in retirement. For someone retiring at 65, they could possibly be in retirement for 30 years. This is a long time and many people don't understand what this means from an income perspective. For this reason, we highly advise people to run an income projection to understand what they have and how long it will last BEFORE they make their retirement decisions.
"For those who don't plan to retire, they need to have a plan B in case they are physically or mentally unable to work. We feel that knowledge is power and we try to give people as much information about retirement and planning for retirement so they can make educated decisions so they won't have to wonder if they're doing the right thing; they'll know they are."
Regardless of where you plan to retire, the number one factor in ensuring that you can retire on your terms is your 401(k). Make sure that your 401(k) is maximizing its potential with this free analysis that checks your fees, fund mix, and other factors to help you hit your retirement goals. For more of our exclusive retirement data and insights, visit MoneyTips Retirement Survey Findings.
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