More than 8 in 10 American workers believe they will need at least three years to rebuild their retirement savings as a result of the economic crisis — up from 64% a year ago.
This is one of the key finding from the latest Sun Life Financial Inc. UnretirementSM Index, released in the United States on Oct. 19.
In addition, more than half the working Americans that responded (52%) expect to work at least three years longer than originally planned — with just as many believing they will retire at 70 as those who believe they will retire at 65.
The Unretirement Index shows that the state of the economy and Americans’ pessimism about their finances may also have a significant impact on voting habits in the upcoming mid-term elections. Over half of those polled (51%) said that due to the economic climate and their own financial insecurity, they plan to vote against the incumbent in the upcoming elections regardless of the incumbent’s political party.
Sun Life’s ongoing research also shows that since the onset of the financial crisis in the fall of 2008, there remains a lack of confidence in the country about what retirement holds for Americans. Less than half of respondents (42%) are very confident that they will now be able to take care of basic living expenses in retirement and only one in four have strong confidence that they will be able to take care of medical expenses. Just under 20% believe they will never fully rebuild from their financial losses.
“Our latest Unretirement Index shows that American workers have surveyed the damage of the economic crisis and are coming to grips with how long it will take them to rebuild their savings and how long they will need to remain in the workforce in order to do so,” said Wes Thompson, President of Sun Life Financial U.S., Wellesley, Mass. “The Unretirement Index demonstrates how low confidence levels are impacting the American psyche and details the changes Americans are making in their saving and spending habits as a result.”
The trend toward working longer into so-called “retirement years” has been increasing, “but as the Sun Life index shows, it is accelerating because of tough economic times. And with the under- and unemployment rates high, there is intense competition for jobs among all age groups,” said Bill Novelli, professor at the McDonough School of Business at Georgetown University and former CEO of AARP.
The Index also found that 70 is the “new 65″ in terms of the expected retirement age in America, with just as many Americans expecting to retire at age 70 as those at age 65. The Index also found that fewer Americans are continuing to work because they “love their career.” In addition, the Index identified a shift in the primary reasons that Americans plan to work past traditional retirement age. In the fall of 2008, before the extent of the crisis was felt across the country, the most popular reason for working past traditional retirement age was “to stay mentally engaged.” Now “to earn enough money to live well” is just as popular a reason.
Unretirement is defined as working at least 20 hours per week after the age when one is eligible to receive Social Security benefits. Sun Life created this Index to learn more about the reasons why Americans are choosing to “unretire,” or continue to work full- or part-time after the age of traditional retirement. For the complete Unretirement Index results, visit www.unretirementindex.com.
Sun Life also has now created a Personal Unretirement Index feature on www.unretirementindex.com that allows consumers to take the survey to find out what their Unretirement Index number is and what it means, while getting resources intended to help them start the retirement conversation with their advisors. As part of the feature, people can easily share their Unretirement Index number with friends and followers on Facebook and Twitter, as well as see how they compare to other people in their age group and geographic range. Sun Life has also made the Personal Unretirement Index available as a widget, which is also available at: www.unretirementindex.com.
Growing concern, lower confidence about the future of government benefits
Over its two-year history, the Unretirement Index has charted increasing pessimism by American workers, since the onset of the economic crisis, that they will receive benefits upon retirement. The number of those polled who are confident that they will receive retirement benefits at a level comparable with today’s retirees reached a new low for programs including Social Security, Medicare, medical benefits from an employer, and government prescription drug benefits with only: