Many Americans are banking on working longer to make up for a lack of retirement savings. According to a recent CNBC and SurveyMonkey survey, about 27% of workers plan to stay employed during their retirement years to boost their income.
The poll, conducted in early August, included over 6,600 U.S. adults, split between retirees and those still in the workforce.
Don't Miss:
- Can you guess how many retire with a $5,000,000 nest egg? – How does it compare to the average?
- Founder of Personal Capital and ex-CEO of PayPal re-engineers traditional banking with this new high-yield account — start saving better today.
It's a strategy that sounds solid at first glance. After all, staying employed into your 60s or 70s should allow you to continue earning money while giving your retirement savings more time to grow. But according to financial experts, this plan might not be as foolproof as it seems.
The Risk of Working Longer
While extending your working years is appealing, it doesn't always go according to plan. Health issues or unexpected layoffs can suddenly throw a wrench in those plans. "It sounds great on paper," said Philip Chao, founder of Experiential Wealth in Maryland. "But reality could be very different."
If workers are forced out of the job market sooner than expected, they may find themselves scrambling to stretch out their retirement savings, and that's where things can get tricky.
Early Retirement Happens More Often Than You Think
Data shows that many Americans end up retiring earlier than they intended. According to a Gallup poll, a consistent five-year gap exists between when people expect to retire and when they do. In 2023, for instance, non-retirees anticipated working until age 66, but most retirees had left the workforce by 62.
This trend isn't new. Research from the Employee Benefit Research Institute (EBRI) shows that 46% of retirees left the workforce earlier than planned. So while a third of workers say they aim to retire at 70 or later – or maybe never – only 6% of retirees manage to stick around that long.
Trending: The number of ‘401(k)' Millionaires is up 43% from last year — Here are three ways to join the club.
The "Escape Valve" That Might Not Work
Many Americans rely on the idea of pushing back retirement as a kind of "escape valve" for financial security. However, as Chao puts it, "saying it and doing it are two totally different things." He warns that this assumption could be a "very dangerous" gamble.
The reasons for those who retire earlier than expected are often out of their control. According to the EBRI survey, 35% retired early due to health issues or disabilities, while 31% faced company-related changes like layoffs.
Working longer seems like a simple solution to building up retirement funds, but reality is far more unpredictable. Life throws curveballs, and relying too much on a late retirement may not be the safety net people think it is. Having other options in place is crucial because sometimes, life has other plans.
Read Next:
- Warren Buffett once said, "If you don't find a way to make money while you sleep, you will work until you die." These high-yield real estate notes that pay 7.5% – 9% make earning passive income easier than ever.
- Can you guess how many Americans successfully retire with $1,000,000 saved? The percentage may shock you.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Comments
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
