Nearly one out of five individuals expects to work until they
die.
That's among the most startling findings of a recent Bankrate-sponsored
survey of Americans' attitudes toward retirement.
The poll of nearly 700 non-retired adults nationwide also found
that one- quarter of all adults (28 percent) save less than 5 percent of their
gross pay a year. That includes 16 percent of Americans who acknowledged they
are not putting any of their paycheck aside for retirement. Even so, optimism
about life in retirement remains high. Six out of 10 Americans "never worry"
or worry "not very much" about outliving their retirement savings.
Such optimism isn't entirely misplaced. Among the brighter surprises:
younger workers aren't just plugged into iPods. They've apparently heard, and
taken note, of messages to start saving for retirement as early as possible.
Many individuals who are relatively new to the workforce are stashing large
amounts of their pay into fledgling nest eggs. That's true even for those with
relatively modest salaries.
Working until you die? Depends on your age
Nearly four of 10 seniors surveyed say they plan on working
until death. And, 21 percent of those between the ages of 35 and 64 purport
that they'll be working forever, too. Only 9 percent of 25-to-35-year-olds expect
to work permanently. Yet, 19 percent of the youngest age group, 18 to 24 year
olds sees work as a forever thing. Our poll, conducted by GfKRoper, did not
survey anyone who was already retired. And the base size of the young set was
small. #1 GRAPH-age-death
"If you're age 65, one of the key things that keeps you
coming to work is the desire to avoid touching your IRA and nest egg for as
long as you can," says Tim Driver, founder of the Web site, Retirementjobs.com.
"Many of these people have lived through the Depression. They grew up in
an environment where watching pennies was the norm. Many of them are working
for healthcare, too. It's by far and away the largest concern for that group."
Driver notes that the notion of retirement is changing. Instead
of quitting and spending the last 20, 30 or even 40 years of unfettered leisure,
older individuals hope to "downshift" their working lives. In some
cases, they want to keep working in some capacity because they miss the intellectual
and social interaction they get from a job. Other times they need the money.
So what about all that fuss about early retirement?
It's still a goal for many. When asked "What' is your target
date for retiring?" roughly one-quarter of all respondents (27 percent)
planned on quitting in their 50s. The younger individuals were more likely to
plan on an early exit; 38 percent of those between 18 and 34 plan on retiring
in their 50s.
Saving habits: good news/bad news
Reaching early retirement goals depends on how well Americans
save and plan, of course. And here, there is good news and bad.
Good news: Slightly more than a third of the people surveyed
(36 percent) say they are stashing at least 11 percent or more of their gross
pay in retirement savings. Of this group, nearly half (16 percent) are saving
in excess of 15 percent each paycheck. That's far above the 10 percent a year
target that's generally set by financial planners.
"It's somewhat surprising, but quite good that we have
at least 36 percent saving enough to get to where they need to be. But what
about the others who are saving less or zero?" says Dick Bellmer, Chairman
of National Association of Personal Financial Planners.
Bad news: In fact, 28 percent of those surveyed save less than
5 percent with 16 percent saving nothing for retirement.
The most startling finding: It's mid-career individuals between
ages 35 to 49 who are having the most difficult time saving. Fourteen-percent
of this age group saves less than 5 percent of their gross pay, and a 18 percent
saves nothing. That's almost twice the amount of boomers (age 50 to 64) who
set aside nothing.
"This is highly consistent with a large body of research
that points to some very large problems for this age group," says Merle
Baker, principle of Brightwork Partners, a research firm that conducts numerous
retirement studies.
There are two problems for 35 to 49 year-olds, says Baker. First,
they are juggling financial demands of paying for their homes, raising children,
saving or funding college tuition, and in some cases, giving money to care for
aging parents. Overwhelmed with such bills, this group often puts their own
retirement plans on hold.
At the same time, this group of workers is far less likely to
get pension benefits from employers than older baby boomer cohorts. The upshot:
despite their inability to save, 30- and 40-somethings nevertheless must rely
on their own efforts to pay for life after work.
"This is the first crowd coming in who must rely on things
like 401(k) savings," says Baker. "As a group, they're very pessimistic
about retiring comfortably. They'll tell you what they plan to do is catch up
later."
That's just what many are doing. Indeed, older workers who aren't
retired embrace their chance to stash away as much as possible, Bankrate found.
One in three (29 percent) of those 65 and older are saving more
than 15 percent a year. That's the highest rate for any age group, although
the survey base size for this group was small. And an additional 15 percent
of those who are at least 65 sets aside 11 to 15 percent of their income. Among
50-to-64 year olds, 23 percent save more than 15 percent of income while 20
percent save between 11 to 15 percent.
The mantra of saving early is sticking
Younger workers are faring astonishingly well, too. Although
they can still amass large fortunes by saving even a modest amount while they're
in their 20s, plenty seem committed to stashing as much as possible.
Nearly half -- 46 percent -- of workers between the ages of
25 and 34 save in excess of 11 percent of their salaries, with 15 percent of
this group setting aside more than 15 percent. Among the youngest individuals
(18 to 24 years old), 4 percent hit the high mark by saving 15-percent and a
respectable 12 percent stashes 11 to 15 percent of pay. Even though this group
was a small percentage of our survey group, the news in encouraging.
"They're getting the message. With the 18-to-24-year-old
group, they're just out of college and already saving money. And the 25-to-34-year-old
group already has a good head-start. If they keep that up, by the time they're
50, the implication is they will be very well off," says Brian T. Jones,
CFP and author of "Getting Started: The Financial Guide for a Younger Generation.
"
Moreover, it's not just young, highly compensated Wall Street
cowboys who are saving. A great number of modestly paid employees -- again,
many of whom tend to be younger -- are just as apt to set a great deal aside.
Roughly three in ten of those earning $20,00 to $29,900 say
they save 11 percent or more of their income annually. An additional 27 percent
of that group saves 5 to 10 percent of pay. Nineteen percent of those earning
less than 30,000 save nothing.
Those who fare the worst earn less than $20,000 annually. Among
them, four out of 10 save nothing. Yet what may be among the most impressive
findings of all is that 19 percent of those with gross yearly pay under $20,000
manages to save 11 percent and more. (This group was a small base size in the
survey.)
"They're not hitting peak earnings years, but if they get
a company match then they'll be well into the teens," says Jones. "Retirement
won't be as dreary as everyone says it will be."
Age drives retirement expectations
Even when savings levels are modest, optimism about retirement
ranks high.
When asked "Do you think life will be better, worse or
about the same when you retire?" -- a whopping 38 percent said they expected
better things to come. An additional 41 percent said life should be about the
same. And only 18 percent saw life getting worse.
But yet again, age more than any other factor, drives expectations.
Younger and even lower-paid workers report to be far more bullish about their
future than older, better-paid individuals. Specifically, 44 percent of individuals
18 to 49 expect life to be better. That's almost twice as many as people over
ages 50 who feel similarly. (Among them, 24 percent expect things to improve
when they retire.)
Income seems less important. Roughly four out of 10 respondents
in all income levels -- that is those who earn under $20,000 annually up to
those who make more than $75,000 -- expect life to get better in retirement.
Those who earn between $20,000 to $29,000 are most optimistic, with slightly
more -- 46 percent -- counting on greater things to come.
It's the mid-level career crowd -- with incomes between $40,000
and $49,000 annually -- who are the most pessimistic. More than one-quarter
of them (26 percent) expects life to be worse in retirement. That's far higher
the 16 percent of lower-income workers raking in less than $20,000 who agree
with that sentiment.
That negativity among the relatively well-paid may not make
sense until one recalls that most of this crowd are those same 35 to 49-year-olds
who've put retirement savings on hold even as they're profoundly aware they've
got to pay for it, says Dee Lee, a certified financial planner and author of
"The Complete Idiot's Guide to Retiring Early" who counsels individuals
nationwide about retirement.
"They're in a consumption phase, and there's really not
much money left, "says Lee. "They want the house, but maybe they bought
it 12 years ago. The fridge goes, the screen door goes. Paying for those kinds
of things add up. They have childcare, which can be as much as $50,000 a year.
They want that all-American dream, the house, the kid, the backyard, the two
cars. It's not like they don't know retirement is there for them. But they're
stuck."
Worry about the future
Perhaps it's not surprising then that this same crowd of 35-to-49-year
olds is most fearful about the future. When asked "how much do you worry
about outliving retirement savings" 21 percent of them said "a great
deal." On average, just 14 percent of individuals of all ages, worries
this much.
Generally though, our survey found that Americans are optimistic
about their cash flow in retirement. Forty-two percent of the people surveyed
said they "never worry" about outliving their money.
This statistic doesn't impress Belmer. "The 40 percent
who don't worry are analogous to an ostrich. They just don't want to think about
it. Retirement is a problem for another day."
This national random-digit-dialed phone study of 687 adults
18 or older was conducted for Bankrate by GfK Roper Public Affairs & Media.
The surveys were conducted from March 29 through April 1, 2007. The sample was
weighted by demographic factors including age, gender, race, education and census
region to ensure reliable and accurate representation of adults in U.S. households.
Results based on the entire sample of 687 adults are projectable to the entire
adult population in the United States, with a sampling error of plus or minus
3.7 percent.
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