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04/17/2019
By Jack Towarnicky

Employers and workers struggle with deferred, delayed retirement decisions.

Join Patti Rowey, vice president at the Transamerica Center for Retirement Studies and Marc Howell, FSA, EA and vice president for custom retirement solutions at Prudential as they share their expertise on “Helping Workers With the Financial and Emotional Aspects of Deciding When to Retire” at PSCA’s 2019 National Conference, April 30-May 1 in Tampa, FL

Are you as surprised as I am about what legal “experts” think when it comes to how and when workers should retire?:

  • Saul Levmore and Martha Nussbaum, professors at the University of Chicago Law School, asserting that we should: “Amend current law to allow employers and employees to agree on a retirement age at the start of a new job.” – As if anyone knows their retirement desires when starting their first job out of college at age 22.1
  • Joshua Gotbaum and Bruce Wolfe wrote an op-ed for Brookings, asserting that America needs to amend age discrimination laws to create a “legal right to transition into retirement gradually over several years.”2

Actual Retirement Experience

There is a big gap between when active workers expect to retire and retirees say they actually did. Workers continue to report an expected median retirement age of 65, while retirees report they retired at a median age of 623:

EBRI’s Retirement Confidence Survey has consistently found that a large percentage of retirees leave the workforce earlier than planned (48% in 2017). Many who retired earlier than planned did so because of a hardship, such as a health problem or disability (41%). One quarter say they retired due to changes at their company (26%) and a similar number say they could afford to retire earlier (24%). This tendency to retire earlier than planned may explain the considerable gap that exists between workers’ expectations and retirees’ experiences.

Retirement Expectations
Among surveyed workers willing to estimate their retirement age:

  • Roughly a third say they will retire before age 65,4
  • Roughly a third say they will retire at age 70 or later, however, only 7% reported retiring at that age, 
  • Only 10% say they will retire before age 60, however, 35% report they retired that early, and 
  • Only 21% say they plan to retire between the ages of 60–64, although 34% retired in that age range. 

Most workers younger than age 45 expect to retire on or before reaching age 65. Most workers age 45 or older expect to retire after reaching age 65.

Transamerica surveyed workers and found that workers were planning to live to age 90, with 22 or those years in retirement – or a retirement age of 68.5

Plan Sponsors / Employers 

With few exceptions, there is no mandatory retirement age in America. Few plan sponsors/employers understand worker retirement patterns. So, while a super majority of employers believe managing the timing of employee retirements is an important business issue, only half of employers assert they have a good understanding of when employees will retire and only 25% believe they effectively manage the pace and timing of employee retirements.6

Nearly 10,000 workers will reach “normal” retirement age 65 every day in 2019. Come hear from the experts on how more and more employers are creating strategies to better manage workers’ transitions into retirement.7


1Saul Levmore, Martha Nussbaum, Let’s Agree on an Age to Retire: Current antidiscrimination law hurts businesses and both younger and older employees, 9/22/17, WSJ, Accessed 4/13/19 at: https://www.wsj.com/articles/lets-agree-on-an-age-to-retire-1506099499 See also: J. Towarnicky, Who Gets To Decide When You Should Retire? 9/28/17 Accessed 4/13/19 at: https://www.psca.org/blog_jack_2017_9
2J. Gotbaum, B. Wolfe, Help people work longer by phasing retirement, Brookings, 12/14/18. “… something more may well be needed: a legal requirement that, unless it’s demonstrably infeasible, large employers offer phased retirement. … failure to offer phased down part-time employment prior to full retirement could, in certain circumstances, be found to be age discrimination. The law would allow employers to defend against such claims by a showing that a part-time phasedown is infeasible and/or involves significant additional expense. …” Accessed 4/14/19 at: https://www.brookings.edu/opinions/help-people-work-longer-by-phasing-retirement/
3Employee Benefits Research Institute, 2018 Retirement Confidence Survey, Fact Sheet #2, Expectations About Retirement, https://www.ebri.org/docs/default-source/rcs/6_rcs_18-fs-2_expect.pdf?sfvrsn=e1e9302f_2
4Employee Benefits Research Institute, 2018 Retirement Confidence Survey, Fact Sheet #4, Age Comparisons Among Workers, https://www.ebri.org/docs/default-source/rcs/8_rcs_18-fs-4_age.pdf?sfvrsn=d1e9302f_2
5Transamerica Center for Retirement Studies, What is “Retirement”? Three Generations Prepare for Older Age, 19th Annual Transamerica Retirement Survey of Workers, April 2019, Accessed 4/13/19 at: https://transamericacenter.org/docs/default-source/retirement-survey-of-workers/tcrs2019_sr_what_is_retirement_by_generation.pdf
6WillisTowersWatson, Working late: Managing the wave of U.S. retirement: How employers are dealing with longer employee careers, 12/19/18, Accessed 4/13/19 at: https://www.willistowerswatson.com/en-US/insights/2018/12/working-late-managing-the-wave-of-us-retirement
7Prudential, Why Employers Should Care About the Cost of Delayed Retirements, 2017, Accessed 4/13/19 at: https://www.prudential.com/media/managed/documents/rp/SI20_Final_ADA_Cost-of-Delayed_1-4-17.pdf See also: Mass Mutual, Is delayed retirement impacting your bottom line? 2017, Accessed 4/13/19 at: https://wwwrs.massmutual.com/retire/pdffolder/rs9342.pdf

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