The retirement patterns of senior faculty are an issue of ongoing interest in higher education: If a significant share of tenured faculty works past “normal” retirement age, challenges can arise for institutional leadership focused on keeping the faculty workforce dynamic for purposes of teaching, research and service.
TIAA-CREF’s Faculty Career and Retirement Survey finds tenured faculty age 50 or older can divided into three groups—35% expect to retire by normal retirement age; 16% would prefer to retire by normal retirement age, but expect to work longer (they are “reluctantly reluctant”); and 49% would like to and expect to work past normal retirement age (they are “reluctant by choice”). Personal finances are a particular barrier for those reluctantly reluctant. Psychosocial factors are the issue with those reluctant by choice.
However, one-half to two-thirds of those reluctantly reluctant appear to be assuming a financial barrier because they have not done a careful evaluation of their retirement finances. In addition, among those reluctant by choice, anywhere from 60% to 90% have not seriously considered what they could do with their time in retirement.
Faculty reporting a defined benefit (DB) pension as their primary retirement plan are 20 percentage points more likely to expect to retire by normal retirement age than are faculty with a defined contribution (DC) plan as their primary retirement plan.
Approximately 40% of traditional retirees and those reluctant by choice are very confident they will have enough money to live comfortably throughout retirement. At the same time, 14% of those reluctant by choice and 8% of traditional retirees are not confident about having enough money during retirement. By comparison, 28% of those reluctantly reluctant are not confident in their retirement income prospects, and only 16% are very confident.
NEXT: Addressing assumptions.
While finances are a driving barrier among those reluctantly reluctant, less than one-half (47%) report having done a careful evaluation of their financial situation and when they can afford to retire. A greater share of both traditional retirees (68%) and those reluctant by choice (62%) have done so.
Furthermore, 53% of reluctantly reluctants have received retirement planning advice from a professional adviser within the past three years, and among these, 58% received advice regarding when they can afford to retire. This means only 31% of reluctantly reluctants have received advice from a professional adviser about when they can afford to retire. In essence, one-half to two-thirds of those reluctantly reluctant to retire assume that they cannot afford to retire, as opposed to know that they cannot afford it.
Their assumptions need to be tested since they may or may not be correct; a financial review could reveal that an individual is actually able to retire at his or her preferred time, TIAA-CREF says in its survey report. In cases where assumptions are validated by a review, the review would quantify the magnitude of the shortfall and the time needed to make it up. It may also reveal manageable changes in saving behavior that would speed recovery time. Financial reviews beginning in mid-career could pre-empt the situation of someone approaching retirement age with (the perception of having) inadequate financial assets, TIAA-CREF suggests.
An analogous dynamic is at play among those reluctant by choice regarding how they could spend their time if retired; 39% report having done a careful evaluation of this. The figure among those reluctantly reluctant is also 39%, but it’s 50% among traditional retirees. And again, this likely overstates the degree of evaluation that has actually occurred.
Less than 10% of those reluctant by choice have worked with a professional adviser in considering how to spend their time if retired. So anywhere from 60% to 90% of those reluctant by choice have not seriously considered what they could do with their time in retirement. This implies that pulls to retirement exist that many have not considered them, and these pulls might outweigh pulls to continued work for an unknown share of those reluctant by choice, TIAA-CREF says.
TIAA-CREF’s survey report is available here.