In recent years, Americans have been retiring later and later in life. But are they working longer because they want to, or because they need to? According to new research, the difference is not so clear-cut.
That's the upshot of a
Among other answers, 29% said they "want to work," meaning they enjoy the sense of purpose and mental activity that their jobs give them. Another 18% said they "need to work," meaning they had originally planned to quit working sooner but haven't saved enough money to do so.
But the study also found something else: Many people who said they just "wanted" to keep working clearly needed to do so. Almost 60% of the "want to work" respondents had saved less than $500,000 — a threshold that Voya said was not enough for a comfortable retirement — and yet they claimed to be working by choice.
"I think part of it is a little bit of denial," said Jessica Tuman, the vice president of Voya Cares. "People think that they like to work, but the reality is that they don't have enough money in their accounts."
Of course, the amount of savings needed for a healthy retirement varies widely from person to person. Most Americans think that less than $500,000 would not be enough. A
So when retirement-age Americans with less than half that amount say they're only continuing to work because they "want" to, Tuman has her doubts.
"I don't think that they're looking at their Social Security statements," she said. "They're not looking at their full financial picture."
This is where financial advisors can step in. For "employment extenders" lucky enough to have one, an advisor can help illuminate how much savings they'll need versus how much they actually have. And in some cases, they can also point out workplace benefits that could help boost a client's savings, such as catch-up contributions and student debt management programs.
"There's such a rich set of employer benefits," Tuman said. "As a financial advisor, you need to talk to your clients and really understand what's available to them."
In general, Americans have been
This is a startling shift, because for about a century, history had been moving in the opposite direction. From the 1880s to the 1980s, Americans were retiring younger and younger. Since the 1990s, they've reversed course.
A great deal of research has attempted to explain why this is. According to the
As Voya's study points out, working longer in life is not always a bad thing. For employees, it can help them stay mentally and physically active. And for employers, older workers have built up skills that can make them good mentors for their colleagues.
"These employees represent years of investment," the study said. "Their experience, knowledge, and professional capacity can obviate the need and expense of training new workers."
But if someone does decide to delay their retirement, Voya argues, it's important for them to understand why they're doing it. A wealth manager can help give them that clarity.
"The role that a financial advisor can have in navigating these things, and just being familiar with some of the vehicles that are available, can really decrease the burden on the client," Tuman said.
