Is True Retirement an Outdated Concept?

New research shows that investment savings and financial security, rather than age, now determine when near-retirees feel ready to retire. Despite improving economic conditions, Maritz Research’s recent Retirement Study marks $500,000 as the tipping point at which people feel comfortable to retire, and many American workers are worried they won’t be able to afford retirement.

Maritz Research collected responses from 1,000 participants in December 2012 — 500 recent retirees, and 500 near-retirees, all with at least $100,000 in savings.

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Not only did the study yield interesting results about the financial point at which workers feel prepared to retire, but its report also demonstrates the difference near-retirees have in attitude compared to recent retirees. The near-retirees indicated more anxiety over their immediate future — whether they’d have enough money to last them through retirement and cover their increased healthcare expenses — compared to the 79 percent of recent retirees who claimed to feel optimistic about their future financial security.

The results of the 2013 Retirement Confidence Survey, the nation’s longest-running annual retirement survey put on by the Employee Benefit Research Institute, illustrated different numbers, but similar trends in attitudes when it released its report in March. The RCS is a random, nationally representative survey of 1,000 individuals age 25 and over, and it, too, reported “a sharp decline in Americans’ confidence about their ability to secure a financially comfortable retirement.”  Thirteen percent of workers reported feeling confident in their ability to have enough money to live comfortably through their retirement years, compared to that of the 18 percent of retirees that share that confidence. Thus, as indicated by Maritz Research’s study, retirees tended to foster more confidence in their prospective futures than workers did.

The RCS also illuminated the different determining factors that now go into one’s retirement age, a number that has risen for many, according to the 22 percent of workers in the 2013 RCS who claimed that their expected ages of retirement had increased in the past year. Workers most frequently cited the poor economy and their distrust in Social Security as the main reasons for postponing retirement. Maritz Research and the RCS therefore both demonstrated that financial security, rather than age, is now commonly the establishing factor for one’s retirement timeline.

Once that timeline is created, the Maritz Research study yielded interesting results about its planning stages. While the research illuminated that 40 percent of retirees wait until within 10 years of retirement to begin planning, it also indicated that 61 percent of recent retirees establish a relationship with a financial advisor before retiring, up from 52 percent in 2005.

One can only speculate as to why workers tend to wait as long as they do before planning. A close analysis of the reported decrease in economic confidence and workers’ ability to comfortably retire may highlight the main reasons workers are reluctant to plan.

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Perhaps the most significant part of both studies’ results is the fact that most of those surveyed claimed to believe that “retirement is an outdated concept,” an assumption shared by the 69 percent of workers in the RCS who say they plan to work after they retire, and the 37 percent of the near-retirees in the Maritz Research study who share the same belief. Workers are clearly adjusting their expectations about retirement, and they illustrate the reality that, for many Americans, the idea of a true retirement seems like an impossibility.

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