Study: Recession Kept Would-Be Retirees Working

Fewer Americans are retiring early — or on time – according to new research from the Employee Benefit Research Institution.

EBRI found before September 2008 and the Great Recession, 72.4% of workers retired either before their expected retirement date, or within one year it. Once the recession hit, that number dropped to 49.6%.

“Various studies have shown there is a trend which precedes the Great Recession that people are staying longer in the labor force,” said Sudipto Banerjee, PhD, research associate at EBRI, and the report’s author. “But this shows that there has been a big increase in later-than-expected retirements following the recession.”

The study showed many workers continued working for more than 3 years after age 65. Before the recession, 83.9% of workers had retired within 3 years of their expected retirement date. After the recession, only 59.3% had retired within 3 years of their expectation.

The study includes longitudinal findings, which showed 38% of workers retired before they expected, but 48% retired after they expected, and only 14% retired the year they had planned.

Meanwhile, the survey found only 18.9% of respondents expected to retire after the age of 65, but nearly double that number — 35.9% – ended up having to work past the traditional retirement age. Among those who expected to have to work past 65, 56.6% ended up doing so.

Not surprisingly, the study found those with a retirement plan tended to be more likely to retire on schedule than workers without a plan.

The report also found that the probability of a person working past age 65 did not vary based on wage earnings.

The study was conducted using data from the University of Michigan’s Health and Retirement Study, which was sponsored by the National Institute on Aging. The full text of the study is available in EBRI’s November edition of EBRI Notes.