The U.S. workforce has seen nothing short of tumultuous times in recent years and the unprecedented zig-zag labor market has employees rethinking everything, especially retirement.
Allspring Retirement’s just released study, conducted by heavyweight The Harris Poll, found that the rising costs of retirement, reduced income stability, and changing perspectives on employment and retirement age have magnified U.S. workers’ preference for a stable set of income sources.
The report found that almost a quarter of current workers expect their retirement savings to last more than 20 years, pointing to a lack of pensions that they could rely on for income stability. Unsurprisingly, 83% of current retirees with a pension feel very confident in their retirement savings lasting through retirement.
Further uncertainty around the future of Social Security benefits is causing workers pause with 72% feeling they would have no idea what to do in retirement if the benefit is not there when they need it. And the fear has workers turning to products that can provide a steady income stream in retirement, such as annuities.
Allspring’s Head of Retirement, Nate Miles, notes that “the ways in which retirement has evolved has shined a light on the need for better retirement income options, including guaranteed and non-guaranteed retirement income solutions.”
Preparation is key
Workers who were more likely to plan for their financial future continue to be more prepared for retirement and ready to overcome unexpected financial emergencies along the way, notably during the COVID-19 pandemic. According to the study, 94% of respondents who were in a “planning” mindset said they felt in control and happy about their current financial life, compared to 64% of those who operated in a “non-planning” mindset. Similarly, 84% of the planners say they are saving (or have saved) enough for retirement versus 47% of the non-planners.
“Even with a long-term view to retirement, the difficulties and uncertainties of the past year were enough to shake the most committed savers, and while most workers feel satisfied with their financial life, many are struggling,” adds Miles.
When and how to retire
When to retire and when to start taking benefits is also on workers’ minds. Half of today’s retirees report that they retired earlier than expected, which cut short what is generally the highest-earning and highest-saving years. Respondents cited health issues and employer decisions as the key drivers for retirement; interestingly, millennials expect to retire at the average age of 61, but 25% are unsure when they will retire. A small percentage (8%) of workers deferred retirement in 2021 due to the impact of the COVID-19 pandemic, which caused some workers’ retirement savings to lag even more.
The cost of healthcare continues to be a primary concern for both workers and retirees. Half (48%) of workers indicated they would retire earlier if healthcare coverage was not dependent on their employer. Notably, this sentiment is led by younger generations (Gen Z: 62%; Millennials: 58%; Gen X: 45%; Boomer: 36%).
Changing outlooks on retirement have been accompanied by a significant shift in employment trends with 30% of workers of all ages saying they would rather quit their job than go back to the office again. This is especially true with younger workers and those living in an urban area, while 28% of workers have relocated or plan to relocate in the next 24 months due to a combination of factors, including lower costs of living (36%), a different lifestyle (35%), lower housing costs (34%) and a better place to raise children (32%).
On behalf of Allspring, The Harris Poll conducted the survey between July 21st – August 4th, 2021 among 3,402 adults (2,304 working Americans ages 18-75 and 1,098 retired Americans).
SEE ALSO:
- Americans Less Confident in Their Finances, U.S. Economy Entering Third Year of Pandemic
- Pandemic-Related Savings Reveal Worker Contradictions
Lynn Brackpool Giles is a contributing editor to 401(k) Specialist. Giles is a former Managing Director of Communications and Consumer Services for the Financial Planning Association (FPA), where she oversaw all corporate, legislative, and consumer communications. In her current journalistic practice, she is a frequent contributor to numerous financial services industry publications.
