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More than One-Fifth of all American Retirees Forced into Retirement Earlier than Planned
Posted on: 2006-12-13 14:26:07 More than One-Fifth of all American Retirees Forced into Retirement Earlier than Planned Sun Life Financial Survey Finds Layoffs, Illness, Injury and Family Obligations Can Necessitate Retirement Years Before Retirees Are Financially Prepared WELLESLEY, Mass.--(BUSINESS WIRE)--Not only are many Americans financially unprepared for retirement, but a recent survey by Sun Life Financial (NYSE: SLF, TSX: SLF) of individuals forced to retire reveals that 22% of all retirees are forced into retirement several years before they had anticipated. The forced retirements have not only left retirees well short of their financial goals, but 69% of respondents also stated their overall retirement plans have been affected either a great deal or somewhat, requiring them to reduce expenses and change their lifestyles to adjust to their new status. Moreover, 55% of all respondents also say they were ineligible for Social Security benefits when they were forced to leave the workforce. “Not only are Americans not saving enough for their planned retirement, but our survey found that more than one in five will retire an average of eight years before they expected,” said Mary Fay, Vice President & General Manager, Annuities of Sun Life Assurance Company of Canada (U.S.). “Pre-retirees and Baby Boomers need to re-evaluate their retirement plans and prepare a contingency plan in case they are forced to undergo an unplanned retirement.” Sun Life Financial has posted an executive summary of the survey and graphics with the survey findings for viewing and downloads. Sun Life Financial’s survey on forced retirement also revealed the following: Impact of Forced Retirement Sixty-nine percent of all respondents said that forced retirement has affected their retirement plans. The response was highest for those under 55 years old, with 77% stating their retirement plans were impacted “a great deal” (57%) or “somewhat” (20%). Those with assets of less than $250,000 also said the forced retirement affected their plans “a great deal” (42%) or “somewhat” (34%). Slightly older respondents aged 55-64 were also affected by forced retirement, with 39% stating their retirement plans were affected “somewhat” and 33% claiming they were impacted “a great deal.” Seventy percent of the mass affluent, with liquid assets between $250,000 and $750,000, also said their retirement plans were affected. Respondents forced into retirement reported needing to make numerous lifestyle and financial adjustments to address the shortfall in anticipated earnings. These include Reduction in Expenses (61%), fewer vacations and social activities (47%), Collecting Social Security before they wanted to (43%) and Using Money from a 401(k) or IRA (30%). Healthcare insurance for themselves and/or their spouses was most cited as the financial obligation to be currently addressed beyond normal living expenses, with 53% of respondents aged 65 and older citing this obligation as most pressing. Causes of Forced Retirement The leading causes of forced retirement were Layoffs/Downsizing (44%), Personal Illness (32%) and Injury (14%). A higher percentage of women cited Family Obligations (10%) as a retirement cause compared to men (2%). Respondents 65 years old and older were more likely to cite Layoffs/Downsizing (58%) as the primary reason for having to retire earlier than planned, while respondents under age 55 were more likely to name Personal Illness (46%) or Injury (26%) as the cause. Retirement Age and Preparedness Of those surveyed, the average expected retirement age was approximately 64 regardless of respondent’s current age, and respondents were forced to retire on average approximately eight years earlier than expected. However, large differences exist between those who were prepared and unprepared for retirement. On average, those who were financially prepared for retirement when they were forced to leave work had expected to work for another 4.9 years, while those who were financially unprepared for retirement expected to be employed for another 11.4 years. Financial Preparedness The average respondent planned on accumulating approximately $1 million in retirement savings, but had accumulated only about half of that amount when they were forced to retire. The gap was most prevalent with respondents under the age of 55, who expected to retire with an average of $1.4 million in savings but only had $314,000 when forced into retirement. “It appears that unanticipated, forced retirement is occurring at an alarming rate, leaving the impacted retirees unprepared,” said Fay. “The survey findings reinforce the importance of pre-retirees to reassess their long-term financial plans and work with a financial advisor to prepare a ‘rainy day’ scenario to ensure they are protected in case the unexpected occurs.” About the Survey This was an online survey conducted within the United States May 16 - May 30, 2006 among 701 adults (aged 18+) who had experienced involuntary retirement, were responsible for or shared in the household’s financial decisions, and were currently working with a financial advisor. Figures for age, sex, race/ethnicity, education, region and household income were weighted where necessary to bring them into line with their actual proportions in the population. Propensity score weighting was also used to adjust for respondents’ propensity to be online. This online survey is not based on a probability sample and therefore no theoretical sampling error can be calculated. About Sun Life Financial Sun Life Financial is a leading international financial services organization providing a diverse range of wealth accumulation and protection products and services to individuals and corporate customers. Chartered in 1865, Sun Life Financial and its partners today have operations in key markets worldwide, including Canada, the United States, the United Kingdom, Ireland, Hong Kong, the Philippines, Japan, Indonesia, India, China and Bermuda. As of September 30, 2006, the Sun Life Financial group of companies had total assets under management of US$358.8 billion. Sun Life Financial Inc. trades on the Toronto (TSX), New York (NYSE) and Philippine (PSE) stock exchanges under ticker symbol SLF. About Harris Interactive Harris Interactive is the 12th largest and fastest-growing market research firm in the world. The company provides research-driven insights and strategic advice to help its clients make more confident decisions which lead to measurable and enduring improvements in performance. Harris Interactive is widely known for The Harris Poll, one of the longest running, independent opinion polls and for pioneering online market research methods. The company has built what it believes to be the world’s largest panel of survey respondents, the Harris Poll Online. Harris Interactive serves clients worldwide through its United States, Europe and Asia offices, its wholly-owned subsidiary Novatris in France and through a global network of independent market research firms. The service bureau, HISB, provides its market research industry clients with mixed-mode data collection, panel development services as well as syndicated and tracking research consultation. More information about Harris Interactive may be obtained at www.harrisinteractive.com. |