More Americans Retiring Later Than They Expected - Capstone Brokerage

Retiring Later and Health benefits

Insurance Journal, November 2014

The “Great Recession” of 2008‒2009 took a toll on the retirement expectations of many Americans.

According to new research from the Employee Benefit Research Institute (EBRI), there has been a nearly 23-percentage-point drop in workers retiring early or close to their expected retirement after the markets crashed. Specifically, EBRI found that before September 2008 (the start of the recession), 72.4 percent of workers retired either before or shortly after (no more than one year) their expected retirement. However, that dropped to 49.6 percent after September 2008.

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

The EBRI analysis compares the expected and actual retirement for the same group of workers. It finds a majority (55.2 percent) of these workers retired within three years (before or after) of their expected retirement.

Specifically, the longitudinal findings show that 38.0 percent retired before they expected, 48.0 percent retired after they expected, and 14.0 percent retired the year they expected to retire. It also shows that more people (35.9 percent) actually retired after 65 than expected (18.9 percent), and among those who expected to retire after 65, 56.6 percent did so.

The study also shows that in 2012, the expected probability of working full-time after age 65 was 48.7 per-cent and 46.0 percent, respectively, among men and women working full-time. But only 12.7 percent of men and 6.0 percent of women worked full-time after age 65 in 2012.

Other reports have identified similar effects of the recession on the retirement plans of older workers.

A Gallup poll published in January found that almost half of those still employed don’t expect to retire until they are 66 or older, including some who say they’ll never stop working.

Also, not all of those who do retire early or on time do so by choice. While some are in position to choose when to retire, others workers have retired because of unemployment following the recession, according to a report from the Center for Retirement Research at Boston College. According to this report, 44 percent of older Americans stopped looking for work after a year of job hunting.

EBRI also found that people who have a retirement plan tend to retire closer to when they expected, compared with those without a plan. It also found that the gap between expected and actual retirement among those with defined benefit plans and defined contribution plans is generally very small.

The EBRI study used data from the University of Michigan’s Health and Retirement Study (HRS), which is sponsored by the National Institute on Aging, and is the most comprehensive national survey of older Americans.

The full EBRI report, “The Gap Between Expected and Actual Retirement: Differences in Cross-Sectional and Longitudinal Evidence,” is published in the November EBRI Notes.

The Employee Benefit Research Institute ( is a private, nonpartisan, nonprofit research institute based in Washington, D.C. EBRI, the sponsors of which include public, private, for-profit and nonprofit organizations, does not lobby and does not take policy positions.

Insurance Journal