From the March 2009 issue of Investment Advisor • Subscribe!

Retirement Behind the Numbers: More Americans Plan on "Unretirement"

Financial crisis side effect--several more years working

"The Unretirement Index, after polling American workers in August 2008, polled them again in December," said David Jacobson, associate director with Sun Life Financial. "As a result, the latest findings are the first to measure how American attitudes and expectations of retirement have changed since the economic crisis last fall."

The Index, released several times each year, gauges how economic, financial, and societal forces affect working Americans, and forecasts their future retirement decisions which will have an impact on individuals, the government, employers, and the broader economy. "The last few months have been so extraordinary, we had to go back and check on people's attitudes," Jacobson explains.

Sun Life's research showed that while the number of Americans who expect to work at least 20 hours a week after age 67--defined as "unretirement"--is largely unchanged, their reasons for continuing to work have shifted dramatically. The most popular reason cited by American workers for why they would continue to work switched from "to stay mentally engaged" to "earn enough money to live well." In the number two position staying mentally engaged remained important, but the number of Americans who cite they will continue working "for health care benefits" rose from the sixth primary reason to the third most common answer, with 64% now listing it as a reason to postpone retirement.

While 54% of the 1,200 American workers interviewed say they will delay their retirement by at least one year due to the current economic situation, a surprising almost one in four (24%) said they will need to work more than five years. "It's amazing how a few months of this economic environment can have such a significant impact," Jacobson said.

In the report, age groups were divided by workers in their 30s, 40s, 50s, and 60+ and by three ranges of total assets, not including the net worth of the person's place of residence (less than $100K, between $100K and $500K, and greater than $500K). Looking at the data by age, it seems Americans aged 40-49 have been afflicted the most. Seventy-seven percent of them who plan to work past traditional retirement are doing so to receive health care benefits. "This represents a 16% spike in just the last 90 days--far more than any other age group," the report reads. This same group also led all demographics in expecting to work five years longer than planned (28%), saving or investing more in the last three months (40%), and continuing to work after 67 because of earning enough money to live well (87%). "This age group--the sandwich generation--seems to be really feeling the squeeze here," says Jacobson.

Some good news is 90% of those surveyed have not had to withdraw any retirement savings from long-term investment products like IRAs, 401(k)s, and annuities. "That may be the silver lining," notes Jacobson. "I think people understand that these are long-term investments." Despite this positive note, confidence that government benefit programs like Social Security and Medicare will remain solvent continued falling, especially among workers in their thirties and forties. Seventy percent of workers in their thirties and 66% in their forties do not believe Social Security will be available when they are 67, according to the Index.

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