Survey: Some Americans who plan to retire say they’ll leave the workforce early

Retirement is a dream for many, but rising costs over the past year have thwarted some Americans’ savings plans. According to a new NerdWallet survey, more than 1 in 4 Americans (27%) say they saved less than they normally would for retirement over the past 12 months due to inflation.

The survey of more than 2,000 U.S. adults conducted online by The Harris Poll on behalf of NerdWallet, asked Americans about their retirement plans, including when they plan to retire and how their plans have changed over the past year. We also asked those who never plan to retire why they don’t think they’ll leave full-time work.

• Retirement plans have altered for some over the past year. The survey found that 3 in 10 Americans (30%) say their planned retirement age has changed over the past 12 months. Some Americans now plan to retire later than originally planned (16%), while others now plan to retire sooner (11%).

• Many plan to retire early. Of Americans who aren’t yet retired but plan to retire at some point, the planned retirement age is 57, on average, or around a decade earlier than 67, the full retirement age to receive Social Security benefits.

• Some Americans plan to stay in the workforce indefinitely. Among Americans who have no plans to retire, the top reason they don’t plan to retire is that they don’t think they’ll ever want to stop working (42%). Close to a third of Americans who don’t plan to retire (31%) say it’s because they don’t think they’ll save enough to do so.

• Not everyone is saving for retirement. The survey found that 11% of Americans haven’t started saving for retirement; more than a quarter of Generation Z (27%) — ages 18-26 — say this.

“For some who are getting close to retirement, high inflation, layoffs or other factors may have impacted their ability to retire on schedule,” says Alana Benson, a NerdWallet investing and retirement writer. 

The past 12 months have brought high inflation, a volatile stock market and the specter of a possible recession. And all of this has affected how some Americans save for retirement. In addition to some Americans saving less due to inflation (27%), other Americans have saved less than they normally would over the past 12 months due to a potential recession (18%), according to the survey. About 1 in 8 Americans (13%) report contributing less to retirement investments over the past 12 months because those investments aren’t performing well.

Economic uncertainty also may lead investors to make emotionally driven decisions when it comes to retirement savings. The survey found that 15% of Americans have changed the types of retirement investments they hold over the past 12 months, while 7% of Americans sold retirement investments they regret selling during this time period.

Over the past year, some Americans have reevaluated their retirement plans: 3 in 10 Americans (30%) say their planned retirement age has changed in the past 12 months. How these plans have changed is split — 16% say their planned retirement age is later and 11% say their planned retirement age is sooner than initially planned. And 2% of Americans had plans to retire, but say they no longer plan to retire at all.

For Americans who plan to retire later, it’s often a matter of savings. Nearly half (47%) of those who say their planned retirement age is now later say it’s because they’re not able to contribute as much as they previously did to retirement accounts. The same proportion (47%) say it’s later because they think they’ll need more saved for retirement than they previously thought. And 1 in 5 (20%) are planning to delay retirement because they had to withdraw funds from their retirement savings to cover another expense.

Despite changes in plan for some, the majority of Americans (62%) intend to retire, and many of them say they’ll leave full-time work early. Of Americans who aren’t retired yet but plan to retire, the average age they plan to retire is 57. The median age of 60 is higher, but still points to many planning on leaving the workforce before age 67, the full retirement age to receive Social Security benefits.

Interestingly, planned retirement age isn’t tied to income, at least not in the way you might think. Of Americans who haven’t retired yet but plan to, the average planned retirement age is 58 for those with household incomes of $100,000 or more. While age 58 is earlier than traditional retirement, it’s still later than Americans with lower household income plan to retire, despite potentially having less money to invest. Those with household income below $50,000 plan to retire at 54, on average, and those with household income between $50,000 and $74,999 plan to retire at 55, on average.

Not everyone has retirement plans. Of the 10% of Americans who plan never to retire, the No. 1 reason they don’t plan to retire is that they don’t think they’ll ever want to stop working (42%). But others don’t feel like they can retire — close to a third of Americans who don’t plan to retire (31%) say it’s because they don’t think they’ll ever save enough to do so, and 18% say it’s because they have to/will have to support other family members financially.

The survey found that 11% of Americans haven’t started saving for retirement. More than a quarter of Gen Zers (27%) haven’t begun saving for retirement, compared with 12% of millennials (ages 27-42), 10% of Generation X (ages 43-58) and 3% of baby boomers (ages 59-77). This is unsurprising, as many Gen Zers are likely new to the workforce, not working yet, or still in school.

It’s unclear to some how much they should even be saving. Over 1 in 5 Americans (22%) say they don’t know how much money they will need to retire comfortably, according to the survey. This is true for 33% of Gen Zers, 27% of millennials, 29% of Gen Xers and 10% of baby boomers.

Retirement for some might not look like whiling away the hours on the beach or traveling, at least not entirely. About 1 in 6 Americans (17%) don’t think they’ll ever be able to save enough money to completely stop working, and 22% of Americans say their retirement plan includes working part-time.

Consider saving (even if you don’t think you’ll retire). A seven-figure goal such as retirement can seem overwhelming, but a known rule of thumb is to invest early and invest consistently. It might feel pointless to put away money for retirement if you don’t have a lot to invest, but you’d be surprised how much it adds up.

Let’s say you’re 22 years old, earn $45,000 a year and have access to a 401(k) through your workplace. Let’s also assume you never get a raise, and you earn a modest 6% on savings in your 401(k), with no employer match. If you put away 3% of your income (or $112 a month) into your retirement account, you’d have $401K by the time you were 67. If you received an employer match on that 3%, your balance would be $803K. And that’s without a raise for your entire career, which is unlikely.

If you don’t think you can (or will want to) retire, it might still be worth saving for. Maybe you can’t save enough to completely leave the workforce, but you could potentially decrease your working hours to part time. Even if you think you’ll want to work forever, having savings can give you options in case your circumstances change. For example, you could become disabled and no longer be able to do your job.

Think about how much you need to save to retire comfortably. More than 1 in 5 Americans (22%) say they don’t know how much money they’ll need to retire comfortably, with younger Americans more likely to say this. If you aren’t sure, you can use a retirement calculator, or even talk to a financial advisor.

“Using a retirement calculator can help you determine the amount of money you’d need to save to retire comfortably; but if you’re not on track with your retirement savings, that’s OK,” Benson says. “Younger people are still approaching their peak earning years, when they may be able to contribute more money. People getting closer to retirement who are behind on their investing goals can utilize catch-up contributions through 401(k)s and IRAs.”

Focus on what you can control. There are a lot of variables when it comes to a long-term financial goal such as retirement, but not all of them are within your control. While external factors — including inflation and global conflict — can affect your retirement plans, those things aren’t within your power to change. But you can decide if you should invest, what you invest in, how much you invest, and when you start investing — and this is where your focus should be.

Think about the long term. According to the survey, 13% of Americans have contributed less to retirement investments over the past 12 months because retirement investments aren’t performing well, and 7% of Americans sold retirement investments that they regret selling over the past year. While there may be a case for changing your retirement investing strategy over the years, most financial advisors will tell you that time in the market is better than timing the market.

Remember your retirement goals. Between the COVID-19 pandemic and high inflation, the past few years have been rough financially for many, and some have had to tap their savings to make ends meet. But think about your retirement goals, when you want to retire, and how much money you’ll need. When you withdraw, any money you withdraw today won’t be able to grow and help cover your future expenses. And because many retirement accounts are tax-advantaged, you’ll likely be subject to penalties if you take funds out before retirement age.

Of course, we don’t always have a choice. Sometimes keeping the lights on and food on the table necessitates making a financial decision that isn’t ideal. Just think about your other options — emergency fund savings, help from family, even a low-interest loan — as well. 

“Remember that your money, your emergency fund and your retirement savings, are tools so you can live a good life. You may choose to bolster them now, so you can have less stress and live more comfortably in the future. But everyone’s situation is unique. Don’t feel bad if you have to use those tools earlier than you planned,” Benson says.

This survey was conducted online within the United States by The Harris Poll on behalf of NerdWallet from Jan. 3-5, 2023 among 2,079 U.S. adults ages 18 and older. The sampling precision of Harris online polls is measured by using a Bayesian credible interval. For this study, the sample data is accurate to within +/- 2.8 percentage points using a 95% confidence level. For complete survey methodology, including weighting variables and subgroup sample sizes, please contact Chloe Wallach at [email protected].

Disclaimer