Benefits No Longer Driving Retirement Decisions

The traditional model of full retirement at a fixed date is on the wane, and this may affect employers’ ability to manage human capital.

Willis Towers Watson surveyed 4,049 retirees ages 65 or older and found that for most people, the decision to retire was prompted by both personal and professional circumstances. Personal circumstances were the top retirement drivers. Almost two in three retirees (64%) reported that personal circumstances—ranging from health issues to a desire for more leisure time—were quite or extremely important to their retirement decision.

Employer incentives were the second most important influence on retirement. More than half (56%) of retirees cited employer retirement plans and other employer incentives as key factors in their decision to retire. Twenty-three percent gave reasons related to their working environment, and the majority of those said that feeling disengaged from their employer, their job or both played a pivotal role in their retirement decision.

The survey respondents retired across almost 35 years—from the 1980s through 2014—allowing for an analysis of changing retirement motives. Older retirees gave different reasons for retiring than younger retirees. A substantially larger proportion (41%) of those who retired in the 1980s cited employer programs (retirement benefits and other incentives) as a major motive to retire, compared with those who retired more recently (27%).

Meanwhile, personal reasons, eligibility for government programs and workplace factors—most often disengagement—have gained greater influence.  

Nearly one in 10 retirees regretted their decision to retire, and 44% of those with regrets said they would like to return to work. Regret was less common for those who retired for personal reasons or in response to employer incentives, but the incidence rises to 17% among those who retired because of job dissatisfaction.

Including retirees who felt highly disengaged at work and/or not valued by their employer pushes the percentage with regrets to almost 20%. This is likely to become more problematic in the future, as more employees continue working because they can’t afford to retire, despite feeling disappointed and less engaged with their jobs, according to Willis Towers Watson.

The overwhelming majority of retirees reported having more leisure time: 55% spent a lot more time pursuing other activities, and 43% spent more time with family and friends. However, nearly one in 10 retirees cited financial concerns and roughly one in eight believed they had retired too soon. Eight percent of retirees felt shocked by retirement or had trouble with the lack of routine or other adjustment difficulties.

Retirees’ experiences were strongly influenced by their reasons for retiring. Those who retired of their own volition had fewer negative experiences. Those who retired because of dissatisfaction with their workplace had more negative experiences: 31% felt they had retired too soon, 24% had difficulty adjusting and 23% worried about whether they could afford retirement.

As more people delay retirement, the work environment is assuming a larger role in retirement decisions, with workers’ feelings about their jobs becoming increasingly instrumental. Willis Towers Watson concludes this is signaling that changing the work environment could open up alternative ways for employers to influence employees’ retirement timing, counterbalancing the receding impact of direct employer incentives.