Lines Between Work and Retirement Are Blurring, Research Finds

People are living longer, more financially complex lives than they ever have, and it is changing the way they think about retirement. A new paper from Transamerica and MIT AgeLab shows that the hard lines between working years and retired years are beginning to blur. As a result, people may need to work longer and think about new strategies to ensure sure they do not outlive their retirement savings.

“What our data shows, and what we are seeing in the marketplace across generations, is that the way we approach our lives and the way we work is changing. People want flexibility and choice in all parts of their life, both at work and home,” says Phil Eckman, Transamerica’s president of workplace solutions .

The paper, “Longevity as Opportunity – New Conversations on Work, Finances, and Well-Being” analyzed feedback from a dozen focus groups and a national survey of 1,200 people. It found that planning for longevity presents a new set of challenges and opportunities for people of all ages. Researchers looked at how longevity impacts how people think about work, finances and well-being throughout their lives.

The paper broke people out into three age groups: adults (ages 20 to 39), adults in midlife (40 to 59) and older adults (60 and up). The paper also identified ways financial advisers can tailor their advice based on where people are in their lives.

According to the findings, well-being and retirement continue to factor prominently in how people view longevity. Nearly all respondents (92%) said saving enough money to retire was very or somewhat important. This was especially true for midlife adults, among whom 74% said it is very or extremely important for them to save enough money to be able to stop working eventually.

However, a significant portion of respondents acknowledged that saving enough money to stop working would be challenging, if it was possible at all. Across all age groups, 33.4% of respondents said they did not expect to be able to retire and were preparing to continue working later in life.

These findings are notable for plan sponsors, as they indicate that participants might be interested in a more flexible approach to entering retirement that includes part-time work.

“We’ re doing a lot more educating on what longevity means,” Eckman says. “People are beginning to realize that there isn’ t a bright line anymore where you’ re retiring at 65. People are working longer, maybe because they need to, but some want to, as well, because it provides a sense of community. Ultimately, the reality is going to be unique to each person, but there is a sense that people are going to be active and potentially working for longer than they might have thought 10 years ago.”

This reality may be driving respondents’ interest in passive income streams, something in which 29.4% of younger adults said they were interested , followed by 28.7% of those in midlife and 22.4% of older adults. Respondents also gave similar weight to investing for longer-term gains, with 21.4% of younger adults saying that was an important goal for them, followed by 20.2% of midlifers.

Growing Complexity

Older respondents— those in midlife and those at or near retirement— are also contending with greater financial complexity overall, the study found.

Respondents in midlife are in their prime earning years, but those earnings are going to multiple places. Many respondents reported managing debt, mortgages, planning for their children’ s college education and planning and paying for the care of their aging parents.

These realities are pushing midlife respondents to look for jobs with high salaries and are putting indicators of well-being like healthy eating on the back burner, the paper noted . Respondents from this cohort reported that they plan to improve their indicators of health and well-being in the future.

Among midlife respondents, 33.9% said they were focused on saving for retirement, and 25.6% said they were interested in receiving help to understand exactly how much they need to save for retirement. Also high on the list were strategies for managing debt: 24.5% of midlifers said this was important.

Older adults may have fewer things they need to save for, but the findings showed that many are thinking about how to spend what they have without outliving it. Among older respondents, 38.8% said they were interested in learning how best to use Social Security and Medicare, while 25.3% were also concerned with planning for care needs for themselves or others. Managing their investment portfolios was also high on the list, with 23.2% saying that was an important issue.

Respondents from this group indicated that while those tools would be helpful, they felt the best of the different cohorts about their financial situation and overall well-being. That finding suggests a link between having the tools and ability to create a retirement plan and feeling better about the future overall.

The findings also highlight what plan sponsors might touch on in their own education and outreach strategies as all age groups are looking for information on how best to plan for retirement.

“I think people recognize that longevity is a gift,” Eckman says. “But it does also change how people understand their lives and what they need to plan for financially. ”

He adds that while respondents have more time to accumulate savings, the financial services industry needs to provide education and tools to help people manage those savings effectively.

“We try to think in terms of helping people live their best lives,” he says. “There are a lot of tools that we can use to help people do that. Longevity planning is more than just saving against a goal number; well-being is important too. We encourage people to think about how they want to live and create a plan that is going to work for them.”