Downturn Reshapes Retirement Expectations

Fifty-two percent of those in a recent Sun Life Financial poll expect to work at least three years longer than planned, and as many people expect to retire at age 70 as those who are planning to retire at 65.

A news release said more than eight in 10 American workers believe they will need at least three years to recoup their retirement savings lost during the economic crisis,  up from 64% a year ago. Just under 20% believe they will never fully rebuild from their financial losses.

Only 42% of respondents are very confident that they will be able to take care of basic living expenses in retirement and only a quarter have strong confidence that they will be able to take care of medical expenses. Seventy-one percent of Americans in the poll are reducing their spending and 66% are reducing their debt.

“Our latest Unretirement Index shows that American workers have surveyed the damage of the economic crisis and are coming to grips with how long it will take them to rebuild their savings and how long they will need to remain in the workforce in order to do so,” said Wes Thompson, President of Sun Life Financial U.S. “The Unretirement Index demonstrates how low confidence levels are impacting the American psyche and details the changes Americans are making in their saving and spending habits as a result.”

In addition, the Index identified a shift in the primary reasons why Americans plan to work past traditional retirement age. In the fall of 2008, before the full extent of the crisis was felt across the country, the most popular reason for working past traditional retirement age was “to stay mentally engaged.” Now “to earn enough money to live well” is an equally popular answer.

Thirty-somethings are the largest group (16%) to say they’ll have to work more than 10 years longer than planned as a result of the economic crisis and also the largest group (87%) to cite doing so “to earn enough money to live well.”

Fifty-one percent of those polled said that due to the economic climate and their own financial insecurity, they plan to vote against the incumbent in the upcoming elections regardless of the incumbent’s political party.

The study was conducted in September 2010. Telephone interviews were conducted by Interviewing Service of America and covered 1,201 people working full-time, part-time, or in job transition.