Whereas a year ago, 64% of American workers expected to work at least another three years to recoup the losses taken in their retirement accounts as a result of the financial crisis, 80% now are planning to remain in the workforce another three years to age 70 or older.
And not too many see themselves sitting pretty in retirement. Only 20% are confident they will fully rebuild their financial losses, only 42% think they will be able to take care of basic living expenses, and only 20% think they will have enough money to pay for medical expenses.
This is according to Sun Life Financial’s “Unretirement” Index, with Sun Life this year dubbing 70 “the new 65.”
“The trend toward working longer into so-called retirement years has been increasing because of tough economic times,” said Bill Novelli, former CEO of AARP and now a professor at Georgetown University.. But despite the willingness to work, with unemployment so high, older Americans as well as all age groups are facing stiff competition for jobs, Novellli noted.
In fact, many Americans are now planning to work to age 70 because of financial reasons. In the fall of 2008, before the crisis was felt throughout the nation, the most popular reason for working past traditional retirement age was “to stay mentally engaged.” Now, workers just as frequently say it’s “to earn enough money to live well.”
The survey also found that a minority of Americans are confident Social Security will be solvent by the time they retire, with only 14% very confident in Social Security, down from 22% in 2008, and only 16% very confident in Medicare, down from 20%.
With these concerns in mind, investors are dramatically changing their spending habits. Eighty-eight are spending less on entertainment, 84% are eating out less, 77% are cutting back on holiday shopping, 72% are putting off a large purchase such as a car or home improvement, 57% are cancelling travel or vacation plans, and 29% have delayed a routine or elective medical procedure. Most alarmingly, 23% are not currently saving for retirement at all.