4 Ways Americans’ Retirement Plans are Changing
NerdWallet study highlights when—or if—they plan to retire, along with who’s not yet saving for retirement
Rising costs over the past year have forced many Americans to rethink when—or if—they plan to retire, according to a new study released Feb. 28 by personal finance website NerdWallet.
The study found that more than one in four Americans (27%) say they saved less than they normally would for retirement over the past 12 months due to inflation.
The survey of more than 2,000 U.S. adults conducted online by The Harris Poll on behalf of NerdWallet, asked Americans about their retirement plans, including when they plan to retire and how their plans have changed over the past year. It also asked those who never plan to retire why they don’t think they’ll leave full-time work.
“For some who are getting close to retirement, high inflation, layoffs or other factors may have impacted their ability to retire on schedule,” says Alana Benson, a NerdWallet investing and retirement writer.
About one in eight Americans (13%) report contributing less to retirement investments over the past 12 months because those investments aren’t performing well.
Here’s a look at four key findings from the study shedding light on changing American attitudes toward retirement.
1. Planned retirement age has changed
Three in 10 Americans (30%) say their planned retirement age has changed over the past 12 months. Some Americans now plan to retire later than originally planned (16%), while others now plan to retire sooner (11%). And 2% of Americans say they had plans to retire, but now say they no longer plan to retire at all.
A recent GOBankingRates survey found roughly one in five (19%) Americans approaching retirement (ages 55-64) said they are delaying their retirement plans due to inflation.
NEXT PAGE: Many plan to retire early
2. Many plan to retire early
Of Americans who aren’t yet retired but plan to retire at some point, the NerdWallet survey found the planned retirement age is 57, on average. That’s a decade earlier than 67, the full retirement age for Social Security benefits.
Of Americans who haven’t retired yet but plan to, the average planned retirement age is 58 for those with household incomes of $100,000 or more. While age 58 is earlier than traditional retirement, it’s still later than Americans with lower household income plan to retire, despite potentially having less money to invest. Those with household income below $50,000 plan to retire at 54, on average, and those with household income between $50,000 and $74,999 plan to retire at 55, on average.
According to Franklin Templeton’s recent “Voice of the American Worker Survey,” Americans said they planned to retire at age 62 before the COVID 19 pandemic. Now, in the wake of the pandemic, rising costs from inflation and the uncertain economy, Americans said in that survey they are not planning to retire until age 65.
SEE ALSO:
• Pandemic Pushes Planned Retirement Age by 3 Years: Franklin Templeton
NEXT PAGE: Planning to skip retirement
3. Planning to skip retirement
Not everyone has retirement plans. Of the 10% of Americans who plan never to retire, the No. 1 reason they don’t plan to retire is that they don’t think they’ll ever want to stop working (42%). But others don’t feel like they can retire—close to a third of Americans who don’t plan to retire (31%) say it’s because they don’t think they’ll ever save enough to do so, and 18% say it’s because they have to/will have to support other family members financially.
About 1 in 6 Americans (17%) don’t think they’ll ever be able to save enough money to completely stop working, and 22% of Americans say their retirement plan includes working part-time.
SEE ALSO:
• Top Reasons Workers Think They’ll Never Be Able to Retire
NEXT PAGE: Who hasn’t started saving for retirement
4. Who hasn’t started saving for retirement
The survey found that 11% of Americans haven’t started saving for retirement. More than a quarter of Gen Zers (27%) haven’t begun saving for retirement, compared with 12% of Millennials (ages 27-42), 10% of Generation X (ages 43-58) and 3% of Baby Boomers (ages 59-77). This is unsurprising, as many Gen Zers are likely new to the workforce, not working yet, or still in school.
It’s unclear to some how much they should even be saving. Over 1 in 5 Americans (22%) say they don’t know how much money they will need to retire comfortably, according to the survey. This is true for 33% of Gen Zers, 27% of Millennials, 29% of Gen Xers and 10% of Boomers.
SEE ALSO:
• 401(k) Balances Dropped 20% in 2022 at Fidelity, But Increased in Q4