The New Retirement Age
You've heard the phrase "40 is the new 30?" Well, 69 is the new 65 when it comes to retirement. According to a recent retirement survey by SunAmerica Financial Group, Americans are working beyond the once golden age of retirement.
I asked Jay Wintrob, President & CEO, SunAmerica Financial Group about the survey's findings and how retirees are trying to achieve a financial peace of mind.
LL: It used to be the goal to retire early. What's the new retirement age?
JW: We found in our survey that retirement is being postponed. Pre-retirees told us they now intend to delay retirement by five years—from age 64 to age 69—triggered in part by increasing longevity, as well as by the recession and financial need.
LL: What is the greatest factor weighing on workers when it comes to retiring?
JW: Nearly three-quarters say that a major worry of living a long life is developing serious health problems. Being a burden on family and running out of money are also serious concerns.
LL: So many more retirees are working again. It use to be for extra spending cash, how much has this changed and are now retirees working to help make ends meet?
JW: Work has increasingly become an important part of retirement. Many are realizing that funding 20 or 30 or more years of non-productivity is increasingly unrealistic. In fact, almost two-thirds (65%) say they would ideally like to include some work in retirement. Those age 55–64 are even more likely than those 65+ to say the ideal retirement includes work (77% versus 56%).
Some may think that only people who need continued income would choose to work in retirement. However, when reporting their reasons for working in retirement, participants ranked money second. The top reason people want to work during retirement is “the stimulation and satisfaction.”
LL: How is the multi-generational family impacting retirement?
JW: Our study revealed family assistance to be the new “wildcard,” as pre-retirees must balance their retirement plans with the possibility of having to financially and emotionally support aging relatives, adult children, grandchildren, and siblings. Nearly half expect they will need to provide financial assistance to family members. In a new twist on “childcare” that may extend many more decades than originally anticipated, 70% of these respondents say they will need to provide financial assistance to their adult children.
LL: There used to be a formula accountants used to suggest this is "how much" you need in order to retire. What's the equation now given life expectancy is increasing and costs rising?
JW: With increasing longevity and market uncertainties, managing money throughout retirement is a growing challenge. Many realize that managing money smartly during retirement is just as important as “how much” they need to save. In fact, the percentage of people age 65+ who have an overall investment strategy for their retirement years has dramatically increased, from 37% in 2001 to 64% in 2011.
Financial peace of mind is now the key goal for the vast majority of Americans and protecting assets is now 5X [five times] more important than higher risk, potentially higher return investments. Today, Americans are looking for investments that protect income from market loss and provide guaranteed income for life.
Many also now recognize that retirement preparation is not a do-it- yourself project. The percentage of people who have received professional financial planning assistance increased from 40% in 2001 to 49% in 2011. The vast majority (68%) who have used financial advisors believe they have been very helpful, and those who sought professional advice are 72% more likely to feel financially prepared for retirement.
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A Senior Talent Producer at CNBC, and author of "Thriving in the New Economy:Lessons from Today's Top Business Minds."