Plan Participants Expect to Work Past Age 65

Defined contribution plan sponsors have opportunities to support their plan participants with plan designs that facilitate those working at older ages and with features to support workers as they transition to retirement, according to Transamerica’s “The Multigenerational Workforce: Life, Work, and Retirement” report.

Workers planning to work past age 65 or to work in retirement overwhelmingly cited financial (80%) and healthy-aging (78%) reasons, the survey found.

“Plan sponsors have an opportunity to assess their plan to determine if they’re fully meeting their employees’ needs and if their employees are actually optimizing the benefits that are available to them,” says Catherine Collinson, CEO and president of the Transamerica Center for Retirement Studies and one of the report’s authors. “There’s still more work to be done to ensure that participants are taking full advantage of what’s available to them, as well as addressing new needs.”

Heidi Cho, a senior research content analyst at the Transamerica Institute, was Collinson’s co-author.

Age-Friendly Employers

For defined contribution retirement plan sponsors, equipping DC retirement plans to support the needs of participants will help distinguish employers as “age-friendly,” as described in the survey, in what could be a contrast with their competitors.

For sponsors, stronger age-friendly workplaces have a “vital role in the evolving world of work” by enabling work arrangements and providing training and tools for employees of all ages to succeed as contributors, the survey found. Almost seven out of 10 (69%) survey respondents considered their employers “age-friendly.” Generation Z (66%), Millennials (70%), Generation X (69%) and Baby Boomers (72%) shared this outlook, according to Transamerica. However, Generation Z workers (23%) were significantly more likely to say their employers were not age-friendly, while Millennials, Gen X and Baby Boomers reported this less (16%, 15% and 12%, respectively.)

The number of participants planning to remain in the workforce reflects the continued transition to defined contribution from defined benefit plans as traditional pensions decline in prevalence, Collinson explains.

“Shifting away from traditional employer-funded pensions to employee-funded defined contribution plans, which often have a contribution from the employer as well, that has shifted the onus to save toward the worker and to take on a lot of the risk management, and many, many workers are not fully equipped to do so,” says Collinson. “The retirement industry has undergone tremendous innovation over the last 25 to 30 years, as it relates to defined contribution plans.”

Workers Cite Health and Finances

The top financial reason workers cited for planning to remain employed past age 65 was wanting the income (54%), while the top healthy-aging reason was to remain active (51%), according to Transamerica. Additional healthy-aging reasons included to “keep my brain alert” (44%), “have a sense of purpose” (38%) and “enjoy what I do” (38%), the survey reported.

Certain financial concerns were cited frequently among the reasons given for continued working, including “concern that Social Security will be less than expected” (36%), “can’t afford to retire” (33%) and “need health benefits” at (27%), data shows.

Baby Boomers and Gen Xers were more likely to cite wanting the income (64%, 58%, respectively) and to say Social Security benefits will be less than expected (36%, 45%), according to the survey. Baby Boomers are also more likely to cite being active (57%) and keeping their brain alert (54%); whereas those in Gen X are more likely to say they cannot afford to retire because they have not saved enough (40%); and Gene Z and Millennials are more likely to cite personal development reasons (both 24%), according to the report.

“The other big, mega trend that’s happening is related to Social Security and [that] the trust funds are estimated to be depleted in about 10 years,” Collinson says. “It’s unclear how any reforms to address that might take place, and it could put an even greater squeeze on workers who are negatively affected by any such reforms.”

Transitioning to Retirement

Almost half of workers surveyed (47%) envision transitioning into retirement by reducing work hours to create more time to enjoy life (29%) or working in a different capacity that is less demanding and/or brings greater personal satisfaction (18%), Transamerica reported.

Nearly one-quarter of respondents (24%) reported they will immediately stop working either when they reach a specific age (14%) or when they have saved a specific amount of money (10%), and another 21% reported planning to work in a current or similar position until they cannot work anymore, Transamerica stated.

Comparing different generations, Baby Boomers and Gen X are more likely (27% and 23%, respectively) than Millennials and Gen Z (19% and 18%. Respectively) to envision working until they cannot work anymore, the survey found.

The report was released by the nonprofit Transamerica Center for Retirement Studies in collaboration with Transamerica Institute. The report included recommendations to retirement plan participants who plan to work longer to extend their working lives.

“As workers plan to extend their working lives, it is important they become more proactive about ensuring their continued employability such as protecting their health, keeping their job skills up to date, staying abreast of the employment market, and networking and meeting new people,” wrote the survey’s authors.

The analysis was prepared by the research team at Transamerica Institute and TCRS. The 25-minute online survey was conducted within the U.S. by the Harris Poll on behalf of Transamerica Institute between September 14 and October 23, 2023, among a nationally representative sample of 5,730 workers in a for-profit company employing one or more employees.