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Retirement Lasted Less Than Two Years for 7 Million
Senior Citizens
Dec. 8, 2005 Retirement only lasted about one and
a half years for seven million American seniors citizens who have now
gone back to work, according to a study by Putnam Investments. The
researchers also estimate about one-third of all retirees are back at
work - most in jobs requiring at least the same skill and experience
levels as their prior position.
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Described as "the largest, most comprehensive study
of Americans who retired and then returned to work," reveals major
changes in traditional retirement patterns.
"Our study shows retirement in the United States
has already moved far beyond ending work at age 65, gold watches, and
early-bird specials," said William T. Connolly, Head of Retail
Management at Putnam Investments. "For many, retirement is just a
planned pause before resuming a career. These 'working retired' are, by
our estimate, now almost one-third of all American retirees."
The Putnam-sponsored study, "The Working Retired,"
offers a fascinating view of workers who have reentered the workforce.
It also highlights vivid economic and emotional contrasts within this
population. Putnam's research was based on a national survey of 1,726
retirees who are working; they have an average age of 61.
The Working Retired:
Well Educated, High Income, but They Don't Own Their Homes
The working retired represent 10% of the U.S.
workforce age 40 or over. Of the respondents to the Putnam survey, most
(54%) work part time, 36% work full time, and the remaining 10% are
looking for work. Two-thirds said they planned to return to work
following their first retirement.
In aggregate, the working retired are an educated
and high-income group. The average household income of survey
respondents, $87,000, is 60% higher than that of traditional non-working
retirees, and the working retired are about twice as likely to have a
college degree.
Surprisingly, over half (60%) still carry a
mortgage, a large percentage for people in their sixties and even
seventies. Further, their home equity is relatively low. As a group, on
average, these working retired own only 47% of their homes.
The working retired who participated in the survey
have, on average, investable assets of about $400,000, and 70% wish
they'd started saving more and sooner. But they're saving now. More than
three-quarters save at least part of their income, and as a group save
an average of 11% of their total household income.
"The working retired see retirement as an
opportunity for growth and fulfillment and pursue these goals in large
part through continued employment," said David Tyrie, Director of
Retirement Services at Putnam Investments. "There's no indication when
the working retired plan to slow down their working, saving or spending.
Their retirement investing needs will be different from any group that
has come before them. Our industry must recalibrate its planning
assumptions for advising these investors, as well as the 75 million
Boomers that come after them."
Over the next two decades, a record number of
Americans will become eligible to retire. Putnam's study may offer a
preview of life for these Baby Boomers, who will begin turning 65 in
2011.
Two Groups
A closer look at the working retired population
reveals a dichotomy: two-thirds of working retired survey respondents
returned to the workforce because they "wanted to," but the remaining
one-third went back out of economic necessity. They "had to." Average
household investable assets for these "wanted to" workers are almost
$550,000, compared to average investable assets of $140,000 for the "had
to" worker.
A large group of these "wanted to" workers went
back to work expecting non-financial rewards. Close to half thought
working might make them healthier and more energetic, and they also saw
it as a way to keep themselves in top mental form. These were
motivations of less than one-third of those working from necessity.
Forty percent of the "wanted to" workers, compared
to only 16% of the "had to" workers, thought working might be "fun."
Satisfaction levels are significantly different too. Fifty-six percent
of working retired who went back to work by choice say they are very
satisfied with retirement, compared to only 16% who went to work out of
necessity.
"Our study reveals an important message for today's
workers," Mr. Tyrie said. "A significant subset of working retirees
today are forced to return to the workforce because of inadequate saving
and investing. Working in their seventies to pay bills is not the
portrait of retirement most Americans envision."
Need for Professional Financial Advice
Less than half (46%) of the entire group of working
retired surveyed have a professional financial advisor. Those with an
advisor have average assets of $621,000, more than 50% higher than the
total group's, and they say they're more comfortable with being on track
financially.
Further, just 25% of these working retired have a
formal financial plan. Of those who do, their most pressing objectives
are maximizing income and preserving wealth. "There's a clear need for
financial advisors among the working retired," noted Putnam's Mr.
Connolly. "As we've seen in our prior studies, people using advisors are
more satisfied with their financial progress and are more financially
secure."
About the Study
"The Working Retired" study was conducted online by
Brightwork Partners in August 2005 for Putnam Investments. Results are
based on interviews with 1,726 respondents who retired from full-time
employment and returned to work. The error rate for the figures cited is
plus or minus 2%. The study's copyright is held by Putnam Investments.
Brightwork Partners LLC is a research-based consultancy focusing on
retirement issues. Visit
www.brightworkpartners.com.
The estimate of the number of people who have
returned to work following retirement was developed by screening random
samples of employed Americans age 40 or over by whether or not they have
ever retired. Approximately 10% have. Projected against a base of
approximately 70 million employed civilians age 40 or over as measured
by the Bureau of Labor Statistics, this proportion equates to
approximately 7 million people.
Some figures in this press release, says the
company, have been rounded.
About Putnam
Founded in 1937, Putnam Investments is one of the
nation's oldest and largest money management firms. As of November 30,
2005, Putnam managed $190 billion in assets, of which $128 billion is
for mutual fund investors and $62 billion is for institutional accounts.
Putnam has headquarters in Boston and offices in London and Tokyo. For
more information, go to
www.putnaminvestments.com.
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