Survey Finds 40 Percent of Americans Plan to Delay Retirement

A new survey from Towers Watson found that four out of every 10 American workers are planning to delay retirement later than they were planning two years ago. These workers said they are willing to pay more for greater certainty in their future retirement and health care benefits, and plan to spend less during retirement. The largest percentage of workers planning to delay retirement was “older Americans” and “those in poor health.”

By surveying 9,100 employed Americans from May through June 2010, Towers Watson found that more than two-thirds, or 68 percent, of older workers said they would delay retirement in order to hold on to their health care coverage, while 62 percent blamed the higher cost of healthcare. And another 61 percent of older workers blamed the decline of their 401K’s value.

“The economic crisis has had a deep effect on employees’ attitudes toward retirement and especially on risk,” said David Speier, a senior retirement consultant at Towers Watson. “Despite the signs that some employees are saving more, spending less and reducing debt as the economy stabilizes, workers continue to have a fear that they won’t be able to afford retirement — and that will have significant implications on companies’ ability to plan their future workforce needs.”

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Taking a proactive perspective, 56 percent of respondents are willing to pay higher amounts out of each of their paychecks in order to ensure a guaranteed, comfortable retirement. This percentage is up from 46 percent in 2009. Also, 54 percent of respondents are willing to pay a higher amount to ensure access to healthcare benefits if they were to retire before they were able to receive Medicare.

“Interestingly, not just older employees are wary. Younger workers, who generally are far less risk-averse given their retirement timeline, are also willing to forgo pay and benefits today for guaranteed and predictable benefits when they retire,” said Speier. “This issue becomes critical as employers begin to reevaluate their overall retirement benefit and health care strategies for the future.”

Along with delaying retirement, many respondents reported other financial actions in order to secure a comfortable future. Nearly two-thirds, or 63 percent, reported they were actively paying off their debits, up from only 33 percent in 2009. And more than half of the respondents, 54 percent, said they are cutting back on daily spending and 34 percent reported increasing their monthly savings (up from 19 percent in 2009). Workers age 50 and over reported that they are adopting more conservative saving and investment strategies and 47 percent of respondents say they are comfortable making their own retirement investment decisions.

For more information about the survey, see here.

Written by Kelly Mellott

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  • Over the last half century, the attitude of workers toward retirement and health benefits has been like watching fashion fads during the late 50s and 60s or the company and self-imposed dress codes on Wall Street in the last few decades.

    For example in the 50s, 60s, and even the 70s, the trend was to demand more employer paid retirement and health benefits. By the time we get to the era of the Silicon Valley, we began seeing retirement plan participants demand more control over their retirement benefits. Defined Contribution plans particularly 401(k) plans became vogue. When the stock market crashed in the late 80s and then again at the beginning of this millennium, we began hearing government and labor leaders complain that retirement savings were far too low.

    Now once again it is the fault of 401(k) plans that those nearing retirement will continue working. 401(k) plans are no different than any other investment vehicle. Most participants somehow believe they have some measure of insulation from moves in the market. Most participants do not realize that there are restrictions on 401(k)s that do not apply to investments they hold directly. Where that became evident was with the Enron demise. This survey seems to confirm that this ignorance is still prevalent among plan participants.

    Employer paid retirement and health benefits were on the rise and for many became a cornerstone of retirement planning in the 50s and 60s. Now once again among employees we are seeing attitudes about employer provided employee benefits similar to those of the late 1940s.

    Where will it go? If there is little cost to the employers because employees are willing to pay for them through lower compensation, then expect them to go in the direction of employee wishes. If not, expect to see the struggle between employers and employees rise. As to employer provided retirement plans, we may see specific industries trending towards not what are today traditional defined benefit plans but what were traditional defined benefit plans during the late 70s.

    • Jim,

      My guess is that employees’ shifting attitude is unlikely to drive retirement plans offerings by employers. The “personal responsibility” trend is irreversible. Employers would rather shift the risks to employees and the government to be competitive with global rivals.

      Even some state governments are reducing retirement benefits for future employees (“The Illusion of Pension Savings,” NY Times, Sept. 17, 2010).

      Thanks for putting attitude toward retirement plans in perspective.

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