Even with a long-term view of retirement among savers, the difficulties of the past year were enough to prompt changing outlooks on retirement and a significant shift in employment trends, according to a new survey.
Examining the attitudes and savings of working adults and retirees, Allspring Global Investment’s newly released retirement study reveals a changing outlook on when workers expect to retire and when they plan to start taking Social Security benefits.
According to the findings, Millennials expect to retire at the average age of 61, but 25% are unsure when they will retire. Meanwhile, half of today’s retirees report that they retired earlier than expected—cutting short the typically highest-earning and highest-saving years—citing health issues and employer decisions as the key drivers of retirement.
What’s more, 44% of current workers and 56% of retirees said they plan to take (or have taken) Social Security benefits as early as possible, even if it means getting less money.
Yet, 76% of workers are concerned Social Security will not be sufficient to cover their retirement expenses. And despite wanting to retire earlier, Allspring’s survey found that only 23% of workers think their nest egg will last more than 20 years. In comparison, 83% of current retirees with a pension felt very confident in their retirement savings lasting through retirement.
The cost of health care continues to be a primary concern for both workers and retirees. Nearly half (48%) of workers indicated they would retire earlier if health care coverage were not dependent on their employer—a sentiment that is led by younger generations (Gen Z 62%, Millennials 58%, Gen X 45% and Boomers 36%).
At the same time, 3 in 10 workers would rather quit their job then go back to the office again, especially younger workers and those living in an urban area. What’s more, 28% of workers indicated they have relocated or plan to relocate in the next 24 months due to a combination of factors, including:
- lower cost of living (36%);
- a different lifestyle (35%);
- lower housing costs (34%); and
- a better place to raise children (32%).
A Planning Mindset
In a plug for retirement planning, Allspring emphasizes the importance for workers to adopt a “planning mindset” to gain an edge. In the firm’s 2018 retirement study, it identified the planning mindset based on the individual’s likelihood to plan for their financial future (in the near term and in the longer term), which may help to strengthen their financial future.
Consistent with its previous studies, the firm notes that workers who were more likely to plan for their financial future continue to be more prepared for retirement and to overcome unexpected financial emergencies. The survey found significant differences between those with and without a planning mindset:
- I feel in control/happy about my current financial life (94% versus 64%)
- I’m saving/have saved enough for retirement (85% versus 47%)
- I’ve saved more since the start of the pandemic (79% versus 51%)
- I make plans for what to do with my finances in case something unexpected happens or plans need to be changed (94% versus 65%)
- I feel overwhelmed/paralyzed in current financial life (11% versus 40%)
“The ways in which retirement has evolved has shined a light on the need for better retirement income options, including guaranteed and non-guaranteed retirement income solutions,” says Nate Miles, Head of Retirement for Allspring Global Investments. “Even with a long-term view to retirement, the difficulties and uncertainties of the past year were enough to shake the most committed savers, and while most workers feel satisfied with their financial life, many are struggling.”
The Harris Poll conducted the survey on behalf of Allspring from July 21–Aug. 4, 2021, among 3,402 adults who reside in the U.S. and are primary or joint household financial decision-makers. The sample consisted of 2,304 working Americans aged 18-75 and 1,098 retired Americans.
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