News & Products, March 2007

A new report by the Vanguard Group has found that Americans aged 40 to 69 expect to gradually ease into retirement, with work playing an important role in their early years of retirement.

“Six Paths to Retirement” details a variety of ways Americans approach retirement, including “downshifting” into retirement by reducing their work hours or taking on part-time work or a less stressful job. Nearly two in three respondents aged 55 to 69, the study found, “have downshifted already or plan to do so in the future.”

The Vanguard study found that retirees take six distinct paths to retirement. The “still working” crowd, the largest group of respondents (35%), stopped working fulltime in their 60s, yet, for financial reasons, continued with some type of part-time work or self-employment. The early retirees, which made up about 30% of survey respondents, stopped working in their 50s and never started working again. Vanguard says while these folks retired earlier than usual, this group “fit the conventional view of retirement,” and had adequate financial resources to support an early retirement. About 12% of the respondents were dubbed semi-retirees because while they retired from full-time work in their 50s, they “took on high levels of part-time work or self-employment,” to stay active, enjoy themselves, or to earn discretionary income, the study found.

One-quarter of Americans, the study reports, follow three other paths. There are those who will never retire–10% of respondents–as well as what Vanguard dubs “returnees,” (5%), who retired early but then returned to work for financial and psychological reasons. The third route is the “spouse’s retirement” path (9% of respondents), which Vanguard says “represents individuals who had lower participation in full-time work in their 40s and 50s and pegged their retirement to that of their spouses.”