The U.S. workforce has seen nothing short of tumultuous
times in recent years and the unprecedented zig-zag labor market has employees
rethinking everything, especially retirement.
Allspring Retirement’s just released study, conducted by
heavyweight The Harris Poll, found that the rising costs of retirement, reduced
income stability, and changing perspectives on employment and retirement age
have magnified U.S. workers’ preference for a stable set of income sources.
The report found that almost a quarter of current workers
expect their retirement savings to last more than 20 years, pointing to a lack
of pensions that they could rely on for income stability. Unsurprisingly, 83%
of current retirees with a pension feel very confident in their retirement
savings lasting through retirement.
Further uncertainty around the future of Social Security
benefits is causing workers pause with 72% feeling they would have no idea what
to do in retirement if the benefit is not there when they need it. And the fear
has workers turning to products that can provide a steady income stream in
retirement, such as annuities.
Allspring’s Head of Retirement, Nate Miles, notes that “the
ways in which retirement has evolved has shined a light on the need for better
retirement income options, including guaranteed and non-guaranteed retirement
income solutions.”
Preparation is key
Workers who were more likely to plan for their financial
future continue to be more prepared for retirement and ready to overcome
unexpected financial emergencies along the way, notably during the COVID-19
pandemic. According to the study, 94% of respondents who were in a “planning”
mindset said they felt in control and happy about their current financial life,
compared to 64% of those who operated in a “non-planning” mindset. Similarly,
84% of the planners say they are saving (or have saved) enough for retirement
versus 47% of the non-planners.
“Even with a long-term view to retirement, the difficulties
and uncertainties of the past year were enough to shake the most committed
savers, and while most workers feel satisfied with their financial life, many
are struggling,” adds Miles.
When and how to retire
When to retire and when to start taking benefits is also on
workers’ minds. Half of today’s retirees report that they retired earlier than
expected, which cut short what is generally the highest-earning and
highest-saving years. Respondents cited health issues and employer decisions as
the key drivers for retirement; interestingly, millennials expect to retire at
the average age of 61, but 25% are unsure when they will retire. A small
percentage (8%) of workers deferred retirement in 2021 due to the impact of the
COVID-19 pandemic, which caused some workers’ retirement savings to lag even
more.
The cost of healthcare continues to be a primary concern for
both workers and retirees. Half (48%) of workers indicated they would retire
earlier if healthcare coverage was not dependent on their employer. Notably,
this sentiment is led by younger generations (Gen Z: 62%; Millennials: 58%; Gen
X: 45%; Boomer: 36%).
Changing outlooks on retirement have been accompanied by a
significant shift in employment trends with 30% of workers of all ages saying
they would rather quit their job than go back to the office again. This is
especially true with younger workers and those living in an urban area, while
28% of workers have relocated or plan to relocate in the next 24 months due to
a combination of factors, including lower costs of living (36%), a different
lifestyle (35%), lower housing costs (34%) and a better place to raise children
(32%).
On behalf of Allspring, The Harris Poll conducted the survey
between July 21st – August 4th, 2021 among 3,402 adults (2,304 working
Americans ages 18-75 and 1,098 retired Americans).
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