Great Recession Shifted Retirement Expectations

Before the start of the recession, circa September 2008, 72.4% of workers retired either before or within one year of their expected retirement. However, that number has dropped to 49.6% after September 2008, according to research from the Employee Benefit Research Institute (EBRI).

“Various studies have shown that there is a trend which precedes the Great Recession that people are staying longer in the labor force,” says Sudipto Banerjee, EBRI research associate. “But this shows that there has been a big increase in later-than-expected retirements following the recession.”

The report analyzes longitudinal survey data that compares the expected and actual retirement for the same group of workers. EBRI finds a majority (55.2%) of these workers retired within three years (before or after) of their expected retirement. Specifically, 38% of people in the study retired before they expected, 48% retired after they expected, and 14% retired the year they expected to retire. More people (35.9%) actually retired after 65 than expected (18.9%), and among those who expected to retire after 65, 56.6% actually did so.

In further review of post-recession trends, the EBRI study found that in 2012 the expected probability of working full-time after age 65 among men and women working full-time was 48.7% and 46%, respectively. However, only 12.7% of men and 6% of women worked full-time after age 65 that year. Additionally, people who have a workplace retirement plan tend to retire closer to when they expected, compared with those without a plan. The results revealed a gap between expected and actual retirement among those with defined benefit plans and defined contribution plans is generally very small.

The full report of “The Gap Between Expected and Actual Retirement: Differences in Cross-Sectional and Longitudinal Evidence,” is available at www.ebri.org.