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How Rising Longevity Is Influencing Retirement Priorities

Practice Management

It’s not just longevity that’s changing people’s retirement journey, but also a growing awareness of their potential longer life is changing Americans’ expectations, attitudes and preparations.

In fact, despite worries about health care and long-term care costs in retirement, a new study finds that Americans still desire to live longer, with nearly 7 in 10 (69%) saying they want to live to 100—but only if they are living well. 

In Longevity and the New Journey of Retirement, the study by Edward Jones and Age Wave of more than 11,000 North American adults examines the changing definition of retirement, the patterns of people’s experience in retirement and the keys to thriving along the way. 

Americans who want to live to 100 indicated that they hope to live longer because they want to spend more years with family and friends (35%), they are enjoying life and want to continue doing so (23%), they are curious about the future (19%) and there is so much more they want to do (18%). Additionally, retirees now say the ideal length of retirement is 29 years.

In contrast, some Americans indicated that they would not want the extra longevity if they were suffering with terrible health (32%), if they became a burden on their families (29%), if they had serious cognitive loss (20%) or if they no longer had purpose in life (14%). 

“Today's retirees enjoy a growing array of opportunities to stay engaged, possibly reinvent themselves and enjoy the freedoms of this stage of life. This is definitely not their parents' or grandparents' retirement,” explains Ken Cella, Principal, Branch Development at Edward Jones. “At the same time, they face new challenges, especially around their health, their finances and finding a new definition of purpose.”

New Stages and Paths

The study also found blurred lines around what people think marks the beginning of retirement. The top milestones that pre-retirees and retirees view as the “start” of this chapter include stopping full-time work (34%), receiving Social Security and/or a pension (22%), leaving one’s job/career (17%) and achieving financial independence (17%). Only 10% said the start of retirement meant reaching a certain age.

This changing definition is reflected in pre-retirees’ and retirees’ retirement plans, as a majority (59%) want to work in some way during their retirement, with 22% looking to work part time, 19% hoping to cycle between work and leisure, and 18% wishing to work full time.

The study further identifies four distinct journey paths characterized by people’s attitudes and ambitions, retirement preparations and their level of enjoyment of life in retirement:

  • Purposeful Pathfinders: This group enjoys the greatest well-being in retirement and is happy, engaged, productive and contributory. They are best prepared for life in retirement and 78% say they are in great shape financially. They began saving for retirement earlier than all the other groups, on average at age 34.
  • Relaxed Traditionalists: Pursuing a more traditional retirement of rest and relaxation, this group had a smooth transition and is well prepared. Most (81%) retired when they chose and while they are the most open to relocating, including to adult-living communities, they have fewer aspirations for personal growth or giving back than Purposeful Pathfinders.
  • Challenged Yet Hopefuls: This group leads active lives and have focused on self-improvement, but their lives in retirement are constrained and uncertain due to insufficient financial preparation. Half say they often worry about outliving their money and this taints nearly all their future hopes. They began saving for retirement later than all the other groups, at age 45, and over half with retirement accounts (54%) have made early withdrawals along the way.
  • Regretful Strugglers: The largest of the four groups at 31%, these challenged individuals are the least prepared for retirement, are the most unhappy and overall feel the least positive about life. Moreover, 43% say they are financially worse off in retirement than during their working years. The majority (59%) say they have many regrets in life and 42% feel that life has dealt them a bad hand.   

Early Action Key  

Not surprisingly, retirees who report better quality of life took more steps decades in advance to prepare and plan across all the four pillars of finances, purpose, family and health. 

Pre-retirees’ most common financial worries about retirement include health care costs and unexpected expenses in retirement and simply outliving their money. In addition, the expenses that most often catch retirees by surprise include major home repairs, dental care and out-of-pocket medical and prescription costs, the study notes. 

When asked about a range of potentially key preparation actions they’d taken, the most common was contributing to a retirement account, an action taken by over half of respondents (52%). Reducing debt and putting investable assets to work were done by about a third of respondents, while 24% worked with financial advisors in preparation for retirement. 

Retirees reporting high quality of life are more likely to have taken all of the listed actions, including 65% with retirement accounts, 45% reducing debt, 45% investing assets and a third working with financial advisors. 

The average retiree began saving for retirement at age 38, and 28% of those with retirement accounts have made early withdrawals. In retrospect, this group wishes they had started saving a decade earlier at age 29. Those with high quality of life started earlier at 36, and only 21% made early withdrawals. “They are also more likely than the average retiree to say that the smartest things they did in preparation include starting to save early, getting out of debt, maximizing their retirement contributions, and working with financial advisors,” the study observes.