According to a recent Gallup poll, Americans expect to retire at an average age of 67, up from 66 in 2011. The average age of retirement has been increasing over the past 17 years from 60 in 1995 to 64 in 2005 and now 67 in 2012. American consumers are predicting they will remain in the workforce longer, in order to accumulate enough savings to support themselves in retirement and pay for the ever-increasing cost of healthcare.
Through the use of financial products such as life insurance and annuities, consumers can help create financial safety nets to safeguard against hardship later in life and avoid outliving retirement savings.
The Gallup poll revealed 39 percent of workers plan to retire after age 65, up from 30 percent in 2007 before the recession hit and just 15 percent back in 1995. About 27 percent of workers still plan to retire at age 65, while older workers expect to retire later than younger employees on average, as the reality of their retirement savings and expenses is more clear to them. The poll showed workers over the age of 40 on average are planning to retire at 68, compared to age 65 for workers under 40 years old.
In the past five years, the percentage of people who believe they can retire early has drastically declined. About 13 percent of workers are now aiming to retire in their early 60s, down from 18 percent in 2007, while the proportion of people who plan to retire in their late 50s is down to 7 percent from 11 percent in 2007. A mere 6 percent of workers think they can retire before the age of 55, remaining consistent with figures from 2007.
Many workers are delaying retirement due to fears of financial insecurity.
“There has been a lot of fallout from the financial crisis,” said Dennis Jacobe, Gallup’s chief economist. “There was a huge loss of savings and investments and housing values and all of those things have hurt potential retirees.”
The survey revealed 55 percent of workers do not expect to have enough money to live comfortably in retirement, up from 42 percent in 2007 and 32 percent in 2002. Workers who expect to be financially secure in retirement dropped from 59 percent in 2007 to 38 percent in 2012.
In a blog for the Wall Street Journal, Catherine Rampell said despite working longer than originally planned, many baby boomers will be leaving the workforce around the same time, leaving a significant gap in the economy. While the job market has been lagging and unemployment has remained at high levels across the country, the transition of many baby boomers into retirement will help free up professional positions for younger workers and possibly decrease the unemployment rate.