Motivated by an improving economy, 53% of senior workers
(ages 60 and older) are delaying retirement, a post-recession low, down from 58% in 2014
and 66% in 2010.
“As household financial situations continue to rebound from
the recession, economic confidence among senior workers is significantly
improving,” says Rosemary Haefner, chief human resources officer for
CareerBuilder.
However, retirement is still far off or even unlikely for
many senior workers, according to the CareerBuilder annual retirement survey. Nearly
half (49%) believe their retirement is at least five years away, while 12% do
not think they will ever be able to retirement. Three-quarters of senior
workers currently delaying retirement cite the recession as a cause.
Reasons for delaying retirement vary among workers. The
inability to retire due to household financial situations is the number one
reason senior workers delay retirement, cited by 78%. The need for health insurance and benefits is cited by 60%.
Alternatively, many senior workers delay retirement because
they simply do not want to stop working, with one-third of workers delaying
retirement because they enjoy their job, 28% because they enjoy where they
work, and 26% because they fear retirement may be boring.
The survey shows 54% of senior workers are planning
to work part or full-time after retirement, up from 45% last year. “Fortunately,
for those workers needing a new job near the end of their careers, employers
are hiring seniors at a faster rate than we’ve seen in recent memory,” Haefner says.
The three most common jobs these workers plan to pursue in retirement are
customer service, retail, and consulting. Findings illustrate 54% of private-sector employers hired mature workers (ages 50 and older) in 2014. That number is up 6%
from 2014. Further, 57% plan to hire mature workers in 2015.
A large majority (70%) of retired senior workers plan to focus
on relaxation in retirement, while 57% say they will spend time with family and
friends, and 48% intend to travel.
The survey was conducted by Harris Poll on behalf of
CareerBuilder among 438 workers ages 60 and older and 2,192 hiring and human
resources managers between November 4 and December 2, 2014.
Forty-two
percent of U.S. households are adequately prepared for retirement, while 46%
perceive they will have an adequate retirement, recent research finds.
Among
all households that are adequately prepared or not, about 52% have a realistic
perception of their retirement readiness.
A
study, “Do U.S. Households Perceive Their Retirement Preparedness Realistically?”
analyzed the deviation between households’ actual preparedness for retirement
and their assessment of retirement readiness, focusing on what factors make
some unrealistically optimistic despite being inadequately prepared. Researchers
KyoungTae Kim, from the University of Alabama Department of Consumer Sciences,
and Sherman D. Hanna, from Ohio State University, found households with a
defined benefit (DB) pension plan are more likely to be unrealistic than similar
households without one.
The
researchers note this is contrary to their expectations, because households
with DB plans are able to assess their guaranteed retirement
income. A possible explanation is that these households might lack a good
understanding of the retirement income generated by their DB accounts, and may just assume that simply having these plans will achieve
adequacy.
Similarly,
households with a defined contribution (DC) plan are less likely to be realistic
than those without one. The researchers say it is
plausible that many workers with DC plans are unfamiliar with
features of their plans, may be unable to accurately assess retirement
adequacy, or may assume that just having a plan may lead to retirement
adequacy. They add that these results suggest the need for better employer
education for workers with such plans.
According to the
research report, it is also possible that workers with these plans have greater
financial experience and are more likely to expect mean reversion in returns—that
the rebound from a financial downturn will be greater than the downturn—than
less-experienced workers without such plans.
Among
financial experience variables, the study found the age of the household head
is positively associated with the likelihood of being unrealistically
optimistic. It is possible that cognitive decline may play a role in this
pattern, but the researchers say it seems unlikely that this could be the only
factor. They point to cognitive dissonance as the reason for the effect of age
on over-optimism. The theory of cognitive dissonance posits that individuals
are distressed by conflicting beliefs, so they attempt to decrease their
dissonance by either changing their past values, feelings or opinions, or
attempting to justify or rationalize their choices. With financial experience,
people should be better able to evaluate objective situations, but cognitive
dissonance may lead to accepting a lower standard of living in retirement, the
researchers say.
Another
explanation might be that older investors have more experience in stock market
cycles and have more belief in the possibility of a stock market recovery by
retirement, but that younger investors, with more limited experience, might be
pessimistic.
A
puzzling finding of the study was that households that use a financial
planner are significantly more likely to be unrealistic than those that do not. The researchers say this raises questions about the
accuracy or benefit of the financial planning services these households receive.
The
researchers also found households headed by a person with a college degree have a lower
rate of being unrealistic optimists than those headed by a person with less than a high school
degree. In addition, whites are less
likely to be unrealistic than households categorized as black or Hispanic and
Asian/others. The researchers say other studies have shown whites have more
financial experience with stock ownership than minority households, so it
seems plausible that the racial/ethnic differences in being realistic about
retirement adequacy might stem from differences in investor experience.
The
researchers say the findings in the study are partially consistent with their
two hypotheses, indicating that households with greater cognitive ability and
more financial experience are likelier to assess their retirement preparedness accurately. However, some findings appear puzzling, and they
note this may be because one cannot directly measure the degree of cognitive
ability and financial experience from the Survey of Consumer Finances (SCF)
data set used for the study. They suggest that to obtain more robust results for
retirement perception research, a different data set should be used with direct
measures of cognitive ability and/or financial literacy related to the
retirement context, such as the Health and Retirement Study (HRS).
The research paper
may be downloaded from the Social Science Research Network website.