Recent research suggests that the reason people return to work after retirement isn’t always for financial reasons. (iStock)
Inflation is moderating, but rising prices are causing more Americans nearing or already retired to postpone their retirement plans or consider returning to the workforce, a recent survey found.
More than two in three people planning to retire (68%) plan to postpone retirement, up from 64% last year, according to F&G Annuity & Life. investigationForty-four percent said they were changing their plans because of inflation, which settled at 3% in June after hitting a 40-year high two years ago. But high prices are still having an impact, and interest rates on everything from auto loans to mortgages are rising as the Federal Reserve tries to tame inflation by raising interest rates.
Respondents also said they needed an intellectual challenge to return to work, but gave other reasons: A third (33%) of those who were considering or postponing retirement said they were leaving because they loved their job; the same proportion said they enjoyed the excitement of their job.
“This remains a challenging macroeconomic environment for those approaching retirement or who are already retired,” said F&G CEO Chris Brandt. “As our survey results show, Americans are still rethinking what retirement means to them, and it may look different than previous generations. We believe taking a proactive approach to financial planning can help mitigate some of the financial risks and allow people to focus on their own unique roadmap for how and when they will retire.”
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Generation X is most affected by rising prices
Gen Xers are the most concerned about how inflation will affect their retirement plans, with 71% saying they are considering or have postponed their retirement date, up from 65% last year, according to the survey.
Beyond inflation, 49% of Gen Xers are worried about not having enough saved for retirement, and 42% said they want more financial options and a bigger safety net.
“Our research shows that Gen Xers are feeling more anxious as they approach retirement,” said John Currier, president of F&G. “With the right advice and financial tools, these fears can be alleviated, such as speaking with a financial professional and considering products like Fixed Index Annuities (FIAs) or Registered Index Linked Annuities (RILAs) that offer both upside potential and downside protection.”
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Americans typically spend about 24% of their income on mortgage payments.
The workers estimated they would need $1.5 million to retire.
Northwestern Mutual says workers need to save $1.5 million to retire comfortably, but many are far from that goal. investigationA third of workers said they had less than $50,000 in savings and investments, and 14% said they had less than $1,000.
Among the generations closest to retirement, only half of Baby Boomers (49%) and Gen Xers (48%) believe they are financially prepared to retire comfortably, and many expect they will likely live to the point where they run out of savings. Even more troubling, while many older Americans in both generations expect to be short of money in retirement, more than a third (37% and 38%, respectively) are not prepared for it.
“The ‘magic number’ for people to retire comfortably has exploded to an all-time high, and the gap between their goals and their progress has never been wider,” said Aditi Jhaveri Gokhale, chief strategy officer, head of institutional investing and president of retail investing at Northwestern Mutual. statement“Inflation has increased expectations for retirement savings, putting pressure on people to plan and be disciplined.”
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