More than a third of Americans said they have either moved up or pushed back their target retirement age because of the Covid crisis, according to new research from Northwestern Mutual.
According to the company’s “2021 Planning & Progress Study,” nearly a quarter of those in a survey this year (24%) indicated that they plan to retire later than expected while one in 10 (11%) plan to retire earlier. Most of those delaying retirement (39%) said they will push it out three to five years. Thirty-five percent said they plan to push it out more than 10 years.
The two youngest generations, the study found, are planning on clocking out of the workforce before age 60—Generation Z at age 59.4 and millennials at age 59.5. Overall, the average age people expect to retire is 62.6, down slightly from 63.4 last year, the study said.
The Northwestern Mutual study found several top reasons people are delaying retirement following the pandemic. One is their desire to work and save money after experiencing additional flexibility in their workplace (cited by 55% of the respondents). Another reason is people’s concerns about rising costs for things like healthcare or unexpected medical costs (named by 50%). Meanwhile, 24% said they’d had to dip into retirement savings, while 14% said they’d had to take care of a relative or friend or additional dependents.
Those who planned to exit the workforce early said they were focused on personal goals and deepening family relationships. Nearly half of those respondents who said they would retire early (48%) indicated that they are moving up their time line by three to five years. Forty-two percent said they want to spend more time with their loved ones; fully one-third (33%) said they want to focus on hobbies or priorities outside of work; 29% said they realize their personal mission is more important than saving more; and 28% said their work situation has changed (they were laid off, etc.).
Christian Mitchell, executive vice president and chief customer officer at Northwestern Mutual, noted that the economic environment created by the Covid crisis has caused a lot of people to re-examine their financial lives. “For some, the prospect of an early retirement appears more achievable, while others are adjusting for delays. In either case, having a holistic plan is critical to navigating the uncertainty and reaching your goals,” he said in a statement.
Respondents reported having an average of $98,800 in retirement savings, up from $87,500 last year, the survey said. And while overall retirement savings are up, more than four in 10 of those surveyed (43%) believe they may outlive their savings, up slightly from 41% last year.
What’s also noteworthy is that respondents believed they need $1,047,200 to comfortably retire. That is an increase from $950,800 in 2020, the survey noted.
As for how they plan to fund retirement, more than a quarter said they plan to lean most heavily on their 401(k) (which was named by 26.5%) and Social Security (cited by 26.5%). And 23.8% of those surveyed said they intend to use personal savings or investments.
Yet the study also found that nearly one-fifth of those surveyed (19%) indicated that Social Security will likely not be available to them when they retire, and 43% said they can imagine a time when Social Security will no longer exist.
The Northwestern Mutual study was conducted in March by the Harris Poll and included 2,320 American adults age 18 or older.