Among the victims of the Great Recession of 2008 was the retirement expectations of many Americans.
A report from the Employee Benefit Research Institute (EBRI) finds a nearly 23-percentage-point drop in workers retiring early or close to their expected retirement after the markets crashed.
Before September 2008, 72.4% of workers retired either before or shortly after (no more than one year) their expected retirement. However, that dropped to 49.6% after September 2008.
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“Various studies have shown that there is a trend which precedes the Great Recession that people are staying longer in the labour force,” says Sudipto Banerjee, EBRI research associate and author of the report. “But this shows that there has been a big increase in later-than-expected retirements following the recession.”
The EBRI analysis is among the first to look at longitudinal survey data that compare the expected and actual retirement for the same group of workers. It finds a majority (55.2%) of these workers retired within three years (before or after) of their expected retirement.
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Specifically, the longitudinal findings show that 38% retired before they expected, 48% retired after they expected, and 14% retired the year they expected to retire. It also shows that more people (35.9%) actually retired after 65 than expected (18.9%), and among those who expected to retire after 65, 56.6% did so.
The study also shows that these longitudinal findings (comparing one cohort at different times) differ from cross-sectional findings (comparing different cohorts at the same time), which are reported more frequently. It shows that, in 2012, the expected probability of working full-time after age 65 was 48.7% and 46%, respectively, among men and women working full-time. But only 12.7% of men and 6% of women worked full-time after age 65 in 2012.
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EBRI also finds that people who have a retirement plan tend to retire closer to when they expected, compared with those without a plan. It also finds that the gap between expected and actual retirement among those with DB plans and DC plans is generally very small.