Seventy-two percent of Americans expect to retire on their own terms, up from 67% a year ago, according to a study released this week by Fidelity Investments. Some three-quarters of participants say they have a plan in place to reach their retirement goals.
The new study focused on the paths that Americans are taking to, and in, retirement. It found that alternative thinking about retirement is becoming mainstream.
Americans are increasingly reinventing what the next phase of their life looks like, including designing how they will phase in different ways of staying engaged and in work. Sixty-one percent of respondents said they intend to transition into retirement.
Among all respondents, these are the top alternatives:
- Gig work and side hustles — 35%
- Starting a small business — 29%
- Consulting part-time — 26%
- Switching industries altogether — 20%
"Retirement is being reframed: It's no longer a single date and instead is an adaptable stage in the next chapter," Rita Assaf, vice president of retirement offerings at Fidelity, said in a statement. "As Americans lean into this new retirement playbook, the importance of planning becomes even more pronounced."
The study is based on a national online survey that Big Village conducted in early December among 2,015 U.S. adults, 18 to 79, who are sole decision-makers or share responsibility with someone else in the household for investment decisions and have an individual retirement account, 401(k), annuity, pension, health savings account or brokerage account.
Retirement as a Transition
Financial realities have been front-and-center for many Americans, the survey found, with inflation, monthly bills and emergency expenses topping their concerns.
At the same time, they are still contributing about $9,000 on average annually to their 401(k), and 88% are capturing an employer contribution, which means that they are keeping the retirement long game in mind, Fidelity said.
The timing of retirement increasingly seems to depend on "when it feels right," both financially and personally rather than on a specific age, according to the survey. Younger generations in particular are embracing the idea that options exist.
Some 80% of Generation Z and 60% of millennials said they plan to phase different kinds of work into retirement.
As Americans adopt this new perspective, their renewed focus on near-term finances is shaping how and how fast they retire. Fifty-one percent of respondents said the rising cost of living is a competing priority to saving for retirement, and 28% cited paying off personal debt as another pain point.
Health care also looms large. Eight in 10 respondents in another Fidelity study agreed that retirement-related health care expenses will be high, upward of $172,500 per individual.
Perhaps as a result of these financial concerns, 52% of survey participants who never plan to retire said that is because they will not be able to afford to entirely stop working.
Many others say they prefer to keep working. Thirty-four percent of these respondents said they want to stay active and engaged, 25% simply want to continue working and 19% want to continue building wealth.
Retirement in Motion: Turning Intention Into Action
As flexible retirement gains traction, the focus turns to how to make those paths work in practice.
Survey participants reported an average of six employers over their careers, and about a quarter of those with a retirement savings account said they maintain multiple accounts from both past and current employers.
Fidelity said it is not surprising that savers are prioritizing retirement account portability and consolidation, a key component of a retirement income strategy and simplifying multiple accounts that can accumulate. Leveraging the potential power of compound interest can be an easy first step to help streamline drawdown strategies as income shifts in retirement.
Those closest to retirement are growing unsure, the survey found: Two-thirds of Gen Xers believe their retirement savings will not last forever, and nearly one-half said they may need to adjust their current lifestyle in retirement.
On a more optimistic note, 83% of respondents with a financial plan in place expressed confidence about their retirement prospects, compared with just 38% of those without a plan.
"The heart of the new retirement playbook is keeping things personal and practical," Assaf said. "With the right plan — built around retirement income, taxes, health care and consolidation — investors can have the tools in their corner to help define a successful retirement journey."
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