New Concept of Retirement Needs New Solutions

The very concept of a retirement in which people stop working altogether could soon become a thing of the past.

Research from Transamerica Center for Retirement Studies (TCRS) in collaboration with Aegon Center for Longevity and Retirement (ACLR) titled “A Retirement Wake-Up Call: The Aegon Retirement Readiness Survey 2016”, shows that people expect to live for 20 years in full retirement, but the reality is that retirement may often be much longer. Increases in longevity may dictate individuals needing to work longer in order to adequately fund their retirement. For some, retirement may involve shifting from full-time to part-time work. For others, it may involve working in a different capacity or pursuing an encore career.

The average age at which workers expect to retire in the survey’s original nine countries has declined slightly from age 65.7 years to age 65.0 years since 2012, and is highly correlated with public policy relating to the age at which government retirement benefits are available. Many workers are flexible about staying in work beyond normal retirement age. Of those not fully retired who envision working in retirement, 57% want to do so to keep active/keep their brain alert, 37% want to do so because they enjoy their work, and 32% are doing so due to general concerns about retirement income and savings.

However, employers are falling short in accommodating workers in extending their working lives and transitioning into retirement. Fifty-eight percent of workers find phased retirement to be a very or extremely important occupational benefit, yet only 28% say that it is offered to them.

More than half (52%) of survey respondents remain optimistic about their health in retirement. Just 20% are pessimistic.

Globally, people expect almost half of their retirement income (46%) will come from Social Security or other government retirement benefits programs; 43% of those in the U.S. do. The research report notes that this is in spite of many governments’ efforts to limit the value of future benefits.

The survey asked respondents in all countries except India what steps governments should take to address the cost of Social Security: 31% responded that the government should increase overall funding for Social Security through raising taxes, without having to reduce the value of individual payments; 15% felt the government should reduce the overall cost by reducing benefits, without having to increase taxes, and 27% felt the government should take a balanced approach.

The survey found a major disconnect regarding the possibility of raising the retirement age to offset the costs of people living longer. Thirty-nine percent of respondents say that the retirement age should remain unchanged, nearly double the proportion who think it should increase in line with life expectancy (20%).

The full research report is available here.