"This Is Not Your Father's Retirement"

by Lydia Saad

How the next generation of retirees could be a productive working class

GALLUP NEWS SERVICE

PRINCETON, NJ -- Americans are redefining what retirement means for them, and the new definition includes part-time work. Much of this revolutionary change in attitudes is forced on baby boomers and Generation X by doubts about the future solvency of the Social Security Trust Fund. Also, according to Federal Reserve Board statistics, Americans are not saving nearly enough for their own retirements. But all this could come with a silver lining for the economy if retirees develop into a new class of productive workers.

According to Gallup's annual Personal Finance poll, conducted April 2-5, 2007, nearly three-quarters of nonretired Americans say they plan to rely on income from part-time work after they "retire," to help fund their golden years. This includes 21% who say part-time work will be a major income source for them, and another 52% who say it will be a minor source. By contrast, less than a quarter of current retirees rely on part-time work for their income today, including just 3% who say it is a major source.

Fiscal Outlook Shaky for Many Americans

Roughly three-quarters of Americans -- including those who are retired and those not yet retired -- say they have enough money to live comfortably at present. But nonretirees are far less positive about their financial futures. Barely half say they expect to have enough money to live comfortably when they do retire; 4 in 10 are doubtful they will have enough.  

Looking Beyond Social Security

The reason for this gap in financial uncertainty between retirees and nonretirees seems clear. While most Americans, retired or not, expect to receive some Social Security benefit, more than half of current retirees say Social Security is a "major source" of income for them. As a result, Social Security is far and away their most important funding mechanism. By contrast, slightly more than one-quarter of nonretirees expect Social Security to be a major source of income in their own retirements.

As detailed in the table, for nonretirees, a variety of financial options replace Social Security as either a major or minor source of potential retirement income for them. Most commonly mentioned are retirement savings accounts (such as a 401(k), IRA, or Keogh plan), other savings, home equity, and part-time work.

Seventy-nine percent of current retirees say they own their own home, but -- in contrast with pre-retirees -- only 45% plan to rely on the equity they have earned to fund their retirement to any degree. The potential of that untapped wealth going to their heirs could partly explain why a fairly large segment of nonretirees (36%) are counting on inheritance money to help see themselves through.

Major/Minor Source of Current or Expected Retirement Income
Ranked by difference

Retired

Non-
retired

Differ-
ence

 

%

%

 

Part-time work

22

73

+51

A 401(k), IRA, Keogh or other retirement savings account

51

81

+30

The equity you have built up in your home

45

69

+24

Money from an inheritance

14

36

+22

Individual stocks/Stock mutual fund investments

43

63

+20

Other savings such as a regular savings account or CDs

57

71

+14

Rent and royalties

18

31

+13

A work-sponsored pension plan

56

59

-3

Annuities or insurance plans

37

44

-7

Social Security

88

78

-10

Full Retirement Also Delayed

According to the self-reported retirement age of the retirees surveyed, the average age at which current retirees stopped working is 60. Nearly 70% of current retires retired before turning 65, while only 27% retired at 65 or older. By contrast, the average age at which the nation's pre-retirees expect to retire is 64. A full majority (57%) of nonretirees say they will retire at 65 or older.

Certainly, some of these differences reflect changes in Social Security laws that have delayed the age at which Americans are eligible to start receiving full benefits, phasing this in from 65 to 67. But they may also reflect changes in societal norms about working longer, or the financial needs of retirees.

Retirement Age
April 2-5, 2007

Under 60

60-64

65
or older

Mean

%

%

%

 

Current retirees
( age retired at)

33

36

27

60

Pre-retirees
( age expect to retire)

17

18

57

64

A 2006 report by the Urban Institute argues for further encouraging retirees to delay retirement as the best solution for addressing fiscal problems in the Social Security's system:

When to retire is one of the most important choices most workers will make --significantly more important than whether to invest their 401(k)s in stocks or bonds. Working longer improves retirees' long-term security. For society, the additional work years can improve economic productivity, generate additional payroll and income tax revenue, and reduce the Social Security deficit. Future Social Security reforms should consider that workers do better when work is encouraged and worse when only benefit cuts are involved. ("Working For a Good Retirement," Oct. 26, 2006)

The difference between retirees and pre-retirees part time work experiences or plans makes clear that today's workers are much more comfortable with the idea of working into their retirement years than their parents would have been. This could ease political resistance to future proposals to delay the normal retirement age even further, or to increase the penalty for early retirement. 

However, while many Americans may be resigned to working in their retirement as a financial must, they don't necessarily embrace the idea. When working Americans are asked what they would prefer to do in their retirement, 49% say they would like to continue working; an equal proportion would like to stop working altogether. Notably, of those who want to keep working, only a small fraction say they would want to maintain a full-time job; most would prefer to work only part time.

(Asked of adults who are employed full time or part time) When you reach retirement age, what would you like to do -- [ROTATED: continue working in your current job, continue working, but in a different job, or stop working altogether]? IF CONTINUE WORKING:¬† Would you like to work ‚Äď [ROTATED: full time (or) part time]?

Continue
working
full time

Continue
working
part time

Stop
working
altogether


No
opinion

 

 

 

 

2007 Apr 2-5

9%

40

49

2

Survey Methods

Results are based on telephone interviews with 1,008 national adults, aged 18 and older, conducted April 2-5, 2007. For results based on the total sample of national adults, one can say with 95% confidence that the maximum margin of sampling error is ¬Ī3 percentage points. In addition to sampling error, question wording and practical difficulties in conducting surveys can introduce error or bias into the findings of public opinion polls.

24. Right now, do you have enough money to live comfortably, or not?

Yes

No

No
opinion

%

%

%

2007 Apr 2-5

73

26

1

 

 

 

2006 Apr 10-13

71

28

1

2005 Apr 4-7

72

28

*

2004 Apr 5-8

74

25

1

2003 Apr 7-9

73

26

1

2002 Apr 8-11

75

24

1

25. (Asked of nonretired adults) When you retire, do you think you will have enough money to live comfortably, or not? 

BASED ON 674 NONRETIRED ADULTS

Yes

No

No
opinion

%

%

%

2007 Apr 2-5

53

42

5

 

 

 

2006 Apr 10-13

50

43

7

2005 Apr 4-7

53

40

7

2004 Apr 5-8

59

35

6

2003 Apr 7-9

59

36

5

2002 Apr 8-11

59

32

9

26. (Asked of nonretired adults) When you retire, how much do you expect to rely on each of the following sources of money -- will it be a major source of income, a minor source of income, or not a source at all?  How about -- [READ A-J IN ORDER]?

BASED ON 674 NONRETIRED ADULTS           

2007 Apr 2-5
(sorted by "major source")

Major
source

Minor
source

Not a
source

%

%

%

A 401(k), IRA, Keogh or other retirement savings account

52

29

17

A work-sponsored pension plan

31

28

39

The equity you have built up in your home

30

39

28

Social Security

27

51

20

Individual stock or stock mutual fund investments

24

39

35

Other savings such as a regular savings account or CDs

23

48

28

Part-time work

21

52

27

Annuities or insurance plans

9

35

54

Money from an inheritance

8

28

64

Rent and royalties

7

24

68

Expected Retirement Income Trends

A. Social Security

 

Major
source

Minor
source

Not a
source

No
opinion

%

%

%

%

2007 Apr 2-5

27

51

20

2

 

 

 

 

2006 Apr 10-13

25

51

22

2

2005 Apr 4-7

28

53

18

1

2004 Apr 5-8

25

56

18

1

2003 Apr 7-9

29

57

12

2

2002 Apr 8-11

27

56

15

2

2001 Apr 6-8

28

57

14

1

B. A 401(k), IRA, Keogh or other retirement savings account

 

Major
source

Minor
source

Not a
source

No
opinion

%

%

%

%

2007 Apr 2-5

52

29

17

2

 

 

 

 

2006 Apr 10-13

47

31

19

2

2005 Apr 4-7

49

33

17

1

2004 Apr 5-8

54

28

18

*

2003 Apr 7-9

47

34

17

2

2002 Apr 8-11

53

28

16

3

2001 Apr 6-8

58

26

15

1

C. Individual stock or stock mutual fund investments

 

Major
source

Minor
source

Not a
source

No
opinion

%

%

%

%

2007 Apr 2-5

24

39

35

2

 

 

 

 

2006 Apr 10-13

19

41

38

2

2005 Apr 4-7

21

41

37

1

2004 Apr 5-8

20

41

38

1

2003 Apr 7-9

20

42

36

2

2002 Apr 8-11

23

43

32

2

2001 Apr 6-8

24

39

36

1

D. Money from an inheritance

 

Major
source

Minor
source

Not a
source

No opinion

%

%

%

%

2007 Apr 2-5

8

28

64

1

 

 

 

 

2006 Apr 10-13

7

31

60

3

2005 Apr 4-7

7

28

63

2

2004 Apr 5-8

8

31

60

1

2003 Apr 7-9

7

31

60

2

2002 Apr 8-11

10

28

60

2

2001 Apr 6-8

7

29

63

1

E. Other savings such as a regular savings account or CDs

 

Major
source

Minor
source

Not a
source

No
opinion

%

%

%

%

2007 Apr 2-5

23

48

28

1

 

 

 

 

2006 Apr 10-13

19

51

28

2

2005 Apr 4-7

18

55

27

*

2004 Apr 5-8

17

52

30

1

2003 Apr 7-9

19

52

27

2

2002 Apr 8-11

23

50

25

2

2001 Apr 6-8

16

51

32

1

F. A work-sponsored pension plan

 

Major
source

Minor
source

Not a
source

No opinion

%

%

%

%

2007 Apr 2-5

31

28

39

2

 

 

 

 

2006 Apr 10-13

26

30

42

2

2005 Apr 4-7

28

31

39

2

2004 Apr 5-8

30

32

37

1

2003 Apr 7-9

28

32

39

1

2002 Apr 8-11

29

33

36

2

2001 Apr 6-8

34

28

37

1

G. Rent and royalties

 

Major
source

Minor
source

Not a
 source

No
opinion

%

%

%

%

2007 Apr 2-5

7

24

68

1

 

 

 

 

2006 Apr 10-13

6

26

66

3

2005 Apr 4-7

6

24

69

1

2004 Apr 5-8

5

25

69

1

2003 Apr 7-9

5

27

66

2

2002 Apr 8-11

8

29

60

3

2001 Apr 6-8

5

22

72

1

H. Annuities or insurance plans

 

Major
source

Minor
source

Not a
source

No opinion

%

%

%

%

2007 Apr 2-5

9

35

54

1

 

 

 

 

2006 Apr 10-13

7

32

59

2

2005 Apr 4-7

9

34

56

1

2004 Apr 5-8

8

34

57

1

2003 Apr 7-9

10

36

53

1

2002 Apr 8-11

7

40

51

2

2001 Apr 6-8

7

34

58

1

I. Part-time work

 

Major
source

Minor
source

Not a
source

No opinion

%

%

%

%

2007 Apr 2-5

21

52

27

1

 

 

 

 

2006 Apr 10-13

18

50

28

3

2005 Apr 4-7

18

51

30

1

2004 Apr 5-8

17

50

32

1

2003 Apr 7-9

13

57

29

1

2002 Apr 8-11

16

51

31

2

2001 Apr 6-8

10

52

36

2

J. The equity you have built up in your home

 

Major
source

Minor
source

Not a
source

No opinion

%

%

%

%

2007 Apr 2-5

30

39

28

3

 

 

 

 

2006 Apr 10-13

26

34

35

5

2005 Apr 4-7

26

41

31

2

2004 Apr 5-8

25

38

34

3

2003 Apr 7-9

25

42

30

3

2002 Apr 8-11

24

40

33

3

27. At what age do you expect to retire?

BASED ON 674 NONRETIRED ADULTS

 

Under 55


55-59


60-64


65

Over
65

Never retire

No opinion


Mean

 %

 %

% 

% 

 %

% 

 %

 

2007 Apr 2-5

6

11

18

27

30

--

8

64

 

 

 

 

 

 

 

 

2006 Apr 10-13

5

9

20

26

29

--

11

65

2005 Apr 4-7

6

9

22

25

31

--

7

64

2004 Apr 5-8

9

11

21

26

26

--

7

64

2003 Apr 7-9

8

11

23

28

22

--

8

63

2002 Apr 8-11

7

15

21

26

21

--

10

63

1995 Dec 15-18

15

12

23

29

15

5

4

60

1995 Nov 6-8

16

11

20

34

12

3

4

60

30. (Asked of adults who are retired) How much do you rely on each of the following sources of income today -- is it a major source of income, a minor source of income, or not a source at all? How about -- [READ A-J IN ORDER]?

BASED ON 334 RETIRED ADULTS

2007 Apr 2-5
(sorted by "major source")

Major
source

Minor
source

Not a
source

%

%

%

Social Security

54

34

10

A work-sponsored pension plan

32

24

41

A 401(k), IRA, Keogh or other retirement savings account

23

28

47

The equity you have built up in your home

20

25

51

Other savings such as a regular savings account or CDs

16

41

41

Individual stock or stock mutual fund investments

16

27

55

Annuities or insurance plans

8

29

62

Part-time work

3

19

78

Money from an inheritance

3

11

85

Rent and royalties

2

16

80

Retirement Income Trends

A. Social Security

 

Major
source

Minor
source

Not a
source

No
opinion

%

%

%

%

2007 Apr 2-5

54

34

10

2

 

 

 

 

2006 Apr 10-13

55

32

12

1

2005 Apr 4-7

58

30

11

1

2004 Apr 5-8

55

31

13

1

2003 Apr 7-9

50

35

13

2

2002 Apr 8-11

58

22

18

2

B. A 401(k), IRA, Keogh or other retirement savings account

 

Major
source

Minor
 source

Not a
source

No opinion

 

 

 

 

2007 Apr 2-5

23

28

47

2

 

 

 

 

2006 Apr 10-13

21

29

48

2

2005 Apr 4-7

21

29

46

4

2004 Apr 5-8

20

27

50

3

2003 Apr 7-9

20

26

51

3

2002 Apr 8-11

19

23

56

2

C. Individual stock or stock mutual fund investments

 

Major
source

Minor
 source

Not a
 source

No opinion

%

%

%

%

2007 Apr 2-5

16

27

55

2

 

 

 

 

2006 Apr 10-13

10

26

62

2

2005 Apr 4-7

12

32

53

3

2004 Apr 5-8

10

26

62

2

2003 Apr 7-9

12

27

57

4

2002 Apr 8-11

15

31

52

2

           

D. Money from an inheritance

 

Major
source

Minor
source

Not a
source

No opinion

%

%

%

%

2007 Apr 2-5

3

11

85

1

 

 

 

 

2006 Apr 10-13

3

14

82

1

2005 Apr 4-7

3

13

82

2

2004 Apr 5-8

3

11

85

1

2003 Apr 7-9

4

11

82

3

2002 Apr 8-11

4

11

84

1

E. Other savings such as a regular savings account or CDs

 

Major
source

Minor
source

Not a
source

No opinion

%

%

%

%

2007 Apr 2-5

16

41

41

2

 

 

 

 

2006 Apr 10-13

14

39

45

2

2005 Apr 4-7

11

41

46

2

2004 Apr 5-8

13

34

51

2

2003 Apr 7-9

14

39

46

1

2002 Apr 8-11

15

33

51

1

F. A work-sponsored pension plan

 

Major
source

Minor
source

Not a
source

No
opinion

%

%

%

%

2007 Apr 2-5

32

24

41

2

 

 

 

 

2006 Apr 10-13

36

21

41

3

2005 Apr 4-7

36

22

40

2

2004 Apr 5-8

34

22

42

2

2003 Apr 7-9

41

14

44

1

2002 Apr 8-11

29

16

51

4

G. Rent and royalties

 

Major
source

Minor
source

Not a
source

No opinion

%

%

%

%

2007 Apr 2-5

2

16

80

2

 

 

 

 

2006 Apr 10-13

5

13

80

2

2005 Apr 4-7

2

13

82

3

2004 Apr 5-8

4

12

82

2

2003 Apr 7-9

5

17

76

2

2002 Apr 8-11

6

13

80

1

H. Annuities or insurance plans

 

Major
source

Minor
source

Not a
source

No opinion

%

%

%

%

2007 Apr 2-5

8

29

62

1

 

 

 

 

2006 Apr 10-13

8

17

73

2

2005 Apr 4-7

6

26

66

2

2004 Apr 5-8

9

21

67

3

2003 Apr 7-9

6

23

69

2

2002 Apr 8-11

8

21

69

2

I. Part-time work

 

Major
source

Minor
source

Not a
 source

No opinion

%

%

%

%

2007 Apr 2-5

3

19

78

1

 

 

 

 

2006 Apr 10-13

3

20

77

1

2005 Apr 4-7

6

17

75

2

2004 Apr 5-8

2

17

80

1

2003 Apr 7-9

1

18

80

1

2002 Apr 8-11

3

14

82

1

J. The equity you have built up in your home

 

Major
source

Minor
source

Not a
source

No opinion

%

%

%

%

2007 Apr 2-5

20

25

51

4

 

 

 

 

2006 Apr 10-13

22

17

57

4

2005 Apr 4-7

25

19

49

7

2004 Apr 5-8

24

19

50

7

2003 Apr 7-9

25

15

55

5

2002 Apr 8-11

18

14

60

8

           

31. (Asked of adults who are retired) At what age did you retire? 

BASED ON 334 RETIRED ADULTS

 

Under
55


55-59


60-64


65

Over
65

No opinion


Mean

%

%

%

%

%

%

 

2007 Apr 2-5

17

16

36

11

16

3

60

 

 

 

 

 

 

 

2006 Apr 10-13

16

14

38

16

11

5

60

2005 Apr 4-7

15

18

35

17

12

3

60

2004 Apr 5-8

17

18

37

14

12

2

60

2003 Apr 7-9

21

14

34

12

15

4

59

2002 Apr 8-11

19

19

34

13

11

4

59

1993 Apr ^

27

18

25

14

11

5

57

1992 Apr ^

21

16

36

13

8

6

58

1991 May ^

28

12

36

11

7

6

57

 

 

 

 

 

 

 

^Gallup/Employee Benefits Research Institute poll

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