Majority Plans to Work Longer Instead of Saving More

Forty percent of individuals state that they intend to work longer, either alone (32%) or in combination with saving more (8%). Only 10% of survey respondents indicated they would only save more in response to the downturn.   

The Center for Retirement Research at Boston College found financial factors dominate the decision to work longer. Respondents who expect more than one-quarter of their retirement income to come from retirement assets have 23 percentage points higher probability of working longer than those who expect retirement assets to fund less than 15% of their retirement income. Respondents who have less than adequate retirement assets before the downturn have 31 percentage points higher probability of working longer than those who have more than adequate pre-downturn assets.   

Households who experienced very little or no financial loss have, respectively, 14 and 19 percentage points lower probability of working longer than households who lost more than one-quarter of their retirement assets.  

The CRR research found only one employment factor is signifi­cant in the decision to work longer – reason for choice of original retirement age. Respondents who chose their expected retirement age based on when they thought they would have enough money to retire have 18 percentage points higher probability of working longer than those who chose their age because it is a “standard retirement age.” In addition, workers who are further away from retirement – and, thus, have more time to respond – are less likely to plan on working longer. 

The CRR Issue Brief also said higher distress is associated with a greater likelihood of working longer, and those who thought “quite a bit” about how the downturn has affected their long-term finan­cial goals have about 19 percentage points higher probability of working longer than respondents who had thought about it less.  

The research found influential factors for saving more are different from those affecting the deci­sion to work longer. Respondents who have higher household incomes are more likely to save more; households making between $50,000 and $75,000 per year have about 15 percentage points higher probability of saving more than those in households who have incomes below $50,000. In addition, those who expect higher than average stock market returns from now until retirement have about 7 percentage points higher probability of saving more than those expect­ing average returns.