80 Is The New 65 For Retiring Americans

Americans retiring later ageThe idea of retiring at age 65 is no longer a reality to many Americans, with many anticipating that they will have to work another 15 years -- to age 80 -- before they can afford to quit work, a new survey shows.

Further, the poll of 1,500 middle-class Americans showed that 76 percent of respondents felt it was more important to save a specific amount for retirement, compared to 20 percent who said it was more important to plan to retire at a specific age, regardless of savings.

The survey, conducted in August and September by Wells Fargo & Co., defined "middle class" as households having income or assets of $25,000 to $100,000.

"The fact that the vast majority of middle-class Americans expect to work well past the traditional retirement age has significant societal and economic implications," says Joe Ready, director of Wells Fargo Institutional Retirement and Trust, in a statement released with the study.

Among the questions raised, Ready says, are whether people will be physically and mentally able to work later in life and the way in which postponed retirements will affect employment opportunities for youth.

Working Out Of Necessity

Results from the survey showed that three-fourths of respondents said they expect to work in the retirement years. Of those, 39 percent said they will do so out of necessity, while 35 percent said they will work because they want to.

Among respondents aged 40 to 59, more than half (54 percent) said they will need to work past retirement age, compared to 34 percent of those 25 to 39.

Likewise, just 25 percent of those aged 40 and 59 say they will work past 65 because they "want to," compared to 45 percent of 25- to 39-year-olds.

The poll further showed that of those Americans who plan to work in the retirement period, nearly half (47 percent) expect to do similar work, while 42 percent expect to be employed in a position that requires less responsibility.

Factors contributing to workers' belief they will need to delay retirement, Wells Fargo says, include the reduction of the number of private employers offering traditional pension plans.

In recent decades, many companies abandoned so-called defined-benefit plans in favor of 401(k) and other types of defined-contribution plans, which are tied to the performance of the stock market.

But the volatility of stock prices in recent years has left many Americans feeling the stock market is no place to put hard-earned retirement funds. The poll showed that 68 percent of those aged 25 to 75 have little confidence in the stock market as a good place to invest for retirement.

When asked how they would invest $5,000 for retirement, half of respondents said they would invest in a mutual fund or stocks, while 45 percent said they would purchase a certificate of deposit from a bank.

The survey also showed that anticipated cutbacks in Social Security and Medicare benefits have many U.S. workers rethinking how much help they can expect in support from government programs.

Scaled-Down Expectations

Perhaps unsurprisingly, the survey showed that younger Americans are more willing to accept cuts to Social Security and Medicare programs to help reduce the ballooning U.S. debt.

About half of those polled who were aged 25 to 49 are willing to accept future cuts, compared to 28 percent of 50- to 59-year-olds, and 19 percent of those aged 60 to 75.

Along with changing attitudes toward work in retirement, Americans are also revisiting their expectations for support from social-welfare programs, says Laurie Nordquist, director of Wells Fargo Institutional Retirement and Trust, in a statement.

"As as we look for solutions to strengthen the country and address the debt load of our nation," she says, "there is a willingness among younger Americans to put traditional support systems on the table for reform."

The poll also showed that middle-class Americans are underestimating the amount of out-of-pocket health-care costs they are likely to incur in retirement, with respondents planning to spend a median $60,000.

But, notes Wells Fargo, a 2010 study from the Center for Retirement Research at Boston College estimated the total cost of uninsured health-care costs for a typical married couple aged 65 is nearly $200,000.

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