We’ve written in the past about today’s workers’ retirement preparedness (or lack thereof). It’s a bad news/improving news scenario. The bad news is that a sizable number of older workers are woefully unprepared (over half of those age 55 and older have less than $50,000 saved for retirement). The improving news is that more people are recognizing their need to do more to prepare.

A new study from Merrill Lynch among people age 45 and older picked up where past studies have left off. Titled Americans’ Perspectives on New Retirement Realities and the Longevity Bonus, the study confirmed several past findings, but also fleshed out some nuances of retirement planning.

For example, past studies have found that about 70% of today’s workers expect to continue working to some degree during retirement. The Merrill Lynch study found the same thing, but also found that most who intend to work in their later years would prefer the option to work part-time or move back and forth between periods of employment and periods of leisure. Encouraged by the possibility of a long lifespan, about half of those who want to work see their later years as an opportunity to explore an entirely different line of work. About the same number are motivated to work by the desire for stimulation and satisfaction, not so much the money.

Still, financial concerns are not far from most people’s minds as they think about retirement, and medical costs are the primary specific area of concern. Asked about their biggest worry related to the prospect of a long life, 72% cited “serious health problems” and 60% chose “not being a burden on my family.” The top financial worry was healthcare expenses.

Two of the wisest overarching principles for later life planning are to plan conservatively and learn from the experiences of those who are now in that stage of life. Along those lines, the Merrill Lynch study found that among people who are now retired, three out of five actually retired earlier than expected. That should be especially noteworthy to those who are planning to work beyond the traditional retirement age. While 27% of those said they retired early because they had the financial resources to do so, 34% said they had to retire early because of health problems and another 24% because they lost their job.

Don’t miss this important paradox: while numerous other surveys have found growing numbers of today’s workers saying they plan to work past the traditional retirement age, 60% of current retirees retired earlier than expected—more than half of which in an involuntary manner.

Among other findings:

  • 88% of today’s pre-retirees and retirees say saving enough to have financial peace of mind is their most important financial goal
  • On a current retirement-related peace of mind index created by Merrill Lynch, which is based on answers to five questions, the average score was 5.8 out of 10.

Perhaps the best approach to take toward retirement planning is to prepare emotionally and vocationally to retire at a later age, but prepare financially to retire at an earlier age.

What are your reactions to this study? And, as much as this question sounds like an oxymoron, to what degree is paid work part of your retirement plan?

Matt Bell is Associate Editor at Sound Mind Investing. Since its founding by Austin Pryor over 22 years ago, SMI has been providing clear, trustworthy, effective investment guidance to the Christian community. Some 10,000 subscribers look to its flagship publication, the Sound Mind Investing monthly newsletter, for biblical guidance on a range of financial issues and specific investment advice.

Publication date: June 10, 2013