Uh oh, looks like some Americans are considering pushing the target date of their retirement plans because of the pandemic.
It’s been a tough two years. People have lost their jobs, gotten sick, loved ones died, and plans have changed. For some this means changing their original retirement plans and retiring later than anticipated.
In a new poll by Northwestern Mutual, 35% of people asked said they were planning on changing their retirement plans because of the pandemic. Of those people 24% are postponing and 11% are retiring earlier than anticipated.
The poll asked approximately 2,320 people, ages 18 and up, about their retirement plans.
The average age of expected retirement for boomers (b. 1946 - 64) is 68, in Gen X’ers (b. 1965-80) it’s 64, and it looks like both Millennials (b. 1981 - 96) and Gen Z’s (b. 1997 - 2012) surveyed think they might be able to retire even younger, at age 59.
The current thinking of the younger groups surveyed could be for a variety of reasons.
Millennials tend not to think about committing to one employer for the balance of their career, and they often jump from job to job every few years, prioritizing a healthy work life balance first.
Gen Z has only just started entering the work force in the last couple years (the oldest among Gen Z are only about 24/25 years old). It’s also possible that the 12% of respondents have not started planning or even thinking about their retirement 35 to 40 years into the future.
Of those older groups planning to postpone their retirement 35% say they are planning to postpone for another decade. Another 39% are planning to retire in the next 3-5 years.
The reasons for postponing were varied but one of the biggest reasons was how the pandemic created a newfound flexibility for older workers.
The possibility of working from home for some, has made remaining in the working world for a few more years a lot more palatable, according to 55% of respondents. Working from home has shown to improve the mental health for some, more comfortable in their own surroundings and able to be productive, without outside distractions.
Those choosing to retire early say they did it for mostly personal reasons, wanting to spend more time with loved ones, to focus on hobbies, or more time focused on themselves, versus adding more to their retirement fund.
With the federal stimulus packages over the last two years, the U.S. savings rate has climbed drastically, with the average retirement savings growing by around $10,000 to $98,000. Still many, about 43%, believe they may outlive their retirement savings.
Over half had no idea how much they should be targeting as saving needed for retirement. Many others believed they needed at least $1 million to comfortably retire which is a long way away from the $98,000 that most have saved.
Planning for retirement is complex and it can certainly be worth consulting a financial planner as a guide to navigate the many steps to ensure you have enough squirreled away for a more comfortable retirement.