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Retire? Older Americans plan to work until they drop

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(Bloomberg Business) — It’s the retirement elephant in the room: How much do you need to be financially secure if you stop working? The answer, from a pool of workers of all ages, was a median of $1 million, according to a new report. Thirty percent of those surveyed said it would be double that. While most people said their required nest egg was just a guess, those numbers would be a daunting goal for most Americans. But then, most people don’t plan to stop working.

Twenty percent of American workers expect to stay in their current position or a similar one until they can’t work any longer, according to a report out today from the Transamerica Center for RetirementStudies (TCRS) that surveyed 4,550 full and part-time workers. Another 41 percent hope to cut their hours when they’re older, or work in a less demanding, or more satisfying, position at their company—even though relatively few workers say their employers offer such options. Only 21 percent plan to walk out the office door when they hit a certain age (14 percent) or a saving goal (7 percent). 

In the survey, 82 percent of workers in their sixties or older said they expect to, or are, working past 65, and don’t plan to stop. A majority of them do it for health coverage or because they need the money. For workers in their fifties, 59 percent have no plans to retire before 65, or retire at all. For forty-somethings it’s 61 percent.

Workers in their 40s feel particularly pinched. Twenty- seven percent said they “have not yet begun to recover (18 percent) or may never recover (9 percent) from the Great Recession.”  While overallretirement confidence is very close to where it was in the 2007 survey (it’s been done annually since 1998) it has slipped from 2014, when 64 percent of people surveyed felt confident about being able to fully retire in comfort. This year, an overall 59 percent of people are confident, and just ten percent are “very” confident they’ll have a comfortable retirement.

About half of the younger workers surveyed, meanwhile, plan to retire at age 65, or sooner. Sixty-seven percent of twenty- somethings are putting money away for retirement, and the median age they started saving was 22. That’s down from a median age of 35 for workers in their sixties or older. It looks like fear is part of the motivation, with 81 percent saying they’re concerned about Social Security not being there for them when they retire.

The bad news is that 37 percent of twenty-somethings don’t know anything about perhaps the most important route to retirement success—smart allocation among stocks, bonds, cash and other investments. Close to a third aren’t quite sure how their assets are divided up, and about a quarter are in “low- risk, low-return investments.”

Investors with long time horizons are typically advised to go heavy in equities, since they can afford to sit out market gyrations in order to get returns well above the rate of inflation. The fact that 24 percent of younger workers are mostly in bonds, money markets and cash is worrisome, says Catherine Collinson, president of TCRS. Even workers in their sixties and older have less than that in conservative investments, at 21 percent. 

If Social Security really isn’t there for younger workers, making sure they have the right asset allocation will be more crucial than it already is. But hey, they have time to learn.