Half of people plan to work past 65 or never retire, survey says

Many of today’s middle-class workers are hoping to work past age 65 or never retire – plans that for over half of them are unlikely to pan out.

Results of a survey published this week by the Transamerica Center for Retirement Studies found that 49 percent of middle-class workers plan to work past 65 in some capacity, including 15 percent who say they will never retire. The top reasons for planning to retire after 65 were “healthy aging” (81 percent) and financial (79 percent).

“Many people in the middle class who are not yet retired expect to retire after traditional retirement age or do not plan to retire,” said Catherine Collinson, CEO and president of the Transamerica Institute. “Working longer and retiring at older ages brings opportunities for extra income” as well as reducing the amount of time spent in retirement, Collinson said.

However, the median retirement age is 62, and over half of people in retirement say they stopped working sooner than they planned to, she said, citing prior research the nonprofit conducted. Earlier retirements were usually due to losing jobs or for personal health reasons – very few retired early because of windfalls or otherwise being financially prepared, she said.

“This is a cautionary tale for those still in the workforce looking to extend their working lives,” she said. “You’ve got to have a backup plan for life’s unforeseen circumstances.”

The fact that so many people plan to work past 65 out of necessity shows a need for more financial advice, she said.

“It’s a huge opportunity for the middle class to better their outcomes through more informed decision making … And it also illustrates an opportunity in the marketplace for financial service providers to serve the middle class,” she said. “There is a very large market begging to be better served.”

For many who are in their prime working years, that advice can come from employer-sponsored retirement plans, she noted.

Among those who do retire sooner than expected, many adjust their spending and live within their means, she said.

Transamerica’s survey includes more than 10,000 responses collected last fall, more than half of which came from people with middle-class household income levels.

A recent poll by Gallup found that most retirees say they have enough money to live comfortably, even as less than half of workers say they think they will have enough in retirement. Retirees may benefit more from Social Security and Medicare than they anticipated, and their costs of living often decrease, Gallup wrote.

An encouraging finding from the Transamerica survey was that the top priorities among those in the middle class were enjoying life (67 percent), being healthy (62 percent), focusing on family (45 percent), planning for financial futures (44 percent), and leading more sustainable lives (28 percent), Collinson said. But a concerning issue is that many do not have sufficient funds to cover a financial shock like paying for long-term care, she said.

That causes adult children to be called upon to provide care, a time-consuming responsibility that can jeopardize their employment and ability to save and invest for their own retirements. The survey found that 38 percent of nonretired people have served as caregivers, with 80 percent of that group having to make adjustments to their work situations.

“It’s a financial vulnerability to middle-class retirees, but it’s also a vulnerability to their adult children,” Collinson said. “It could create a self-perpetuating cycle.”