Americans ready for a working retirement

When MoveOn recently used a "working retirement" TV commercial, they were attacking President Bush's plan for privatization of Social Security. The group was widely criticized by conservative supporters of Bush's proposal but a recent study shows that MoveOn is probably right, at least to the extent that Americans do want a "working retirement."

In a survey by Merrill Lynch, baby boomers are not interested in pursuing a traditional retirement of leisure. The majority of boomers relate they plan to keep working and earning in retirement, but will do so by cycling between periods of work and leisure, thus creating a new model of retirement. (Related article: Americans prefer retirement security over wealth)

The New Retirement Survey offers a complex and illuminating preview of the kind of lifestyles, workstyles and recreation activities that boomers envision for their future. Some of the other highlights of the survey are:

1. The new retirement "turning point." While 76% of boomers intend to keep working and earning in retirement, on average they expect to "retire" from their current job/career at around 64 and then launch into an entirely new job or career. Taking advantage of their "longevity bonus," boomers will create a whole new life stage. Since Social Security established the "normal" retirement age at 65, life expectancy for a 65-year-old has increased by over seven years and continues to lengthen. As a result of living longer, this generation plans to be "younger" longer and work longer. Most boomers (65%) will stop working for pay and retire in the traditional sense at some point. However, that phase is more likely to begin in the late 60's, than at age 60 or 65. (Related article: Retirement planning tips for baby boomers)
2. Boomers reject a life of either full-time leisure or full-time work. When probed about their ideal work arrangement in retirement, the most common choice among boomers would be to repeatedly "cycle" between periods of work and leisure (42%), followed by part-time work (16%), start their own business (13%) and full-time work (6%). Only 17% hope to never work for pay again.
3. The unpredictable cost of illness and healthcare is by far boomers' biggest fear. They are three times more worried about a major illness (48%), their ability to pay for healthcare (53%) or winding up in a nursing home (48%), than about dying (17%). (Related article: Even American millionaires are worried about retirement income)
4. Boomer women are better educated, more independent, are simultaneously juggling more work and family responsibilities and are more financially engaged than any generation in history. Married boomer women are more than six times more likely to share responsibility for savings and investments compared to their mothers' generation (33% now vs. 5% then). Boomer women are dreaming of retiring to Mars while boomer men hope to retire to Venus. Boomer men are looking forward to working less, relaxing more, and spending more time with their spouse. While boomer women view the dual liberations of empty nesting and retirement as providing new opportunities for career development, community involvement and continued personal growth. (Related article: Women likely to be hurt by privatization of Social Security)
5. Financial preparedness is the gateway to retirement freedom and the antidote to retirement-phobia. Accumulating the resources boomers believe they need for retirement freedom (81%), rather than age (56%) or any other variable, was cited as the most decisive factor for when they choose to retire. And, recognizing the growing uncertainty of government entitlements, boomers who have a plan and feel prepared are twice as optimistic and far less fearful compared with those who do not.

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Useful links:

MoveOn

Merrill Lynch