April 17, 2012

Most Younger Investors Find Post-Retirement Work Appealing

T. Rowe Price survey finds few think they will need the income, but most want to stay engaged

A worker in an Amazon warehouse in Arizona. (Photo: AP) A worker in an Amazon warehouse in Arizona. (Photo: AP)

A majority of younger Americans expect to work after they retire and to do so because they want to stay active and involved, according to research released Monday by T. Rowe Price.

Researchers found that 69% of adults between the ages of 21 and 50 planned to work full-time or part-time during retirement, and of those only 23% will feel compelled to do so to supplement savings.

“Beginning with the Baby Boom generation, a new vision of retirement has emerged—one that includes an active lifestyle and, for many people, continued work or even a second career,” Christine Fahlund, senior financial planner with T. Rowe Price, said in a statement.

“This survey suggests that, looking ahead, many younger investors are ready to adopt this relatively new approach to retirement, as well.”

Harris Interactive conducted an online survey in December on behalf of T. Rowe Price among 860 adults aged 21 to 50 who have at least one investment account.

Other survey findings:

  • Respondents plan to retire at a mean age of 62.
  • They expect to live in retirement a mean 22 years.
  • Seventy-seven percent anticipate tax rate increases between now and when they retire.
  • Forty-three percent expect a part-time job to be a source of income during their retired years.

“Successfully navigating retirement is, in many ways, an exercise in striking a proper balance between things like work and leisure, saving and spending,” Fahlund said. “We often recommend that people in their 60s who are on track with their savings not wait until they retire to start experimenting with activities they were planning.”

Taking a practice run while still receiving wages and benefits can help pre-retirees financially, emotionally and psychologically, she said. And working longer allows investors to fund their activities with earned income, hold off tapping their retirement nest eggs and defer taking Social Security payments.

Fahlund added this caveat: Investors who choose this approach to retirement generally should use some of the money from their additional years of salary for the funding they need, and not dip into their accumulated savings.

As well, investors should strive to put their financial houses in order before they fully retire, including paying off their mortgages and other debts and purchasing any big-ticket items they think they might need or want in retirement.

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