Older Employees' Retirement Expectations are Changing

Boy! This is an important topic to stay on top of in today’s economic times as more and more of our Baby Boomers continue to face the decision to either make the transition into retirement or keep working for a while longer. This should also be a time where these workers can get some help.

In fact, if you are within 5 to 10 years of possibly retiring, get proactive! Have a sit down with a financial professional like you will find at Summerlin Benefits Consulting, to get some guidance and do some planning for your financial future. Why? Read on to find out…..

Declining Retirement Confidence

It’s unfortunate, but in a recent publication by SHRM (Society for Human Resource Management), retirement confidence is down amongst today’s employees, with fewer workplace savers seeing themselves on track to retire in the time frame they originally planned to. 

In fact, workers outlook on retiring have seen a reversal from the last few years, where confidence remained steady and even increased. Most workplace savers now say they're unsure about the economic outlook given the rising inflation, interest rates, and steep market declines in 2022. In recent studies, only 63% of savers feel they are on track for retirement. The current status reflects a steadily decreasing expectations and confidence for the last several years, since just a year ago the percentage was at 68%.

SHRM surveyed 1,308 people and confirmed that inflation is the main driver for the decline in confidence amongst respondents, all of which who do already participate in their employer's 401(k) or 403(b) plans. 87% of those workplace savers reported that they have concerns about inflation affecting their retirement.

It was also found in this survey, that older workers may have a more realistic view of retirement expectations than younger workers. Nearly half of Baby Boomers said they'll need to save between $1 million and $3 million for a comfortable retirement, which is at least four times the amount that those from Generation Z anticipate needing. This data could also lead to the conclusion that many of today’s workers may also not be getting the proper education and guidance in the workplace to properly prepare for their financial future. 

Delayed Retirements

A more pressing issue is that half of those who planned to retire in 2023 are reconsidering or have put that plan on hold, according to a mid-2022 survey of 1,000 U.S. consumers by software-maker Quicken Inc.  And workers ages 58 to 74 who were not planning on retiring in 2023 are now considering delaying retirement even further.

Among those who are considering delaying retirement, or "unretiring" and returning to the labor force, the changing economic climate is top of mind. Respondents cited the following factors as reasons they will need to continue working:

• Inflation pushing up costs (cited by 65 percent).
• The decline in the stock market (45 percent).
• Increased interest rates (30 percent).

Even before this years economic challenges, retirement ages have been rising.  People are just working longer. The major drivers for delaying retirement in recent decades, as researchers noted, include the shift from guaranteed defined benefit pensions to defined contribution 401(k)s, and the decline of retiree health insurance, as well as extended life spans and the desire to remain active and engaged.

Protecting Your Retirement Savings

At Summerlin Benefits Consulting we know that today’s more mature employees want help with saving for retirement and safely transitioning into retirement when the time is right. It would be good if all employers provided resources to help their employees make informed decisions about their long-term savings, but unfortunately not all employers do.   

Advisors at Summerlin Benefits Consulting can help because they will know what guidelines should apply to you and will be familiar with strategies that the average worker isn’t made aware of. 

For example, did you know that employees in their mid to late 50’s are often allowed to do an In-Service Transfer from their 401k to a safe external environment, like rolling the funds over into an IRA that’s protected by a Fixed Index Annuity. This will allow the employee to move their money to safety NOW- even while they are still working, so that they won’t experience the impact of major losses in their lifesavings right before they get ready to retire. 

Would You Like Help?

Stacy J. Summerlin, President of Summerlin Benefits Consulting Inc. was recently quoted saying "More mature investors, even when still employed, should be considering making the shift- as in, moving their retirement savings focus to Safety 1^st.   It’s not just smart, but vital that in the months and years leading up to retirement, you protect the money you already have while still getting a reasonable rate of return over time. This is the only way that today’s more mature workers are going to regain some of their confidence to retire."

At Summerlin Benefits Consulting we are focused on helping today’s more mature employees prepare for their retirement future. Contact us today for a no obligation planning meeting.