The Challenge of Deciding When to Retire


One of the biggest decisions a person will make is when he or she will voluntarily retire. Though a great deal of emphasis has been made to encourage saving for retirement, arguably not enough emphasis has been placed on determining the “optimal” date for retirement or considering what one’s retirement lifestyle will be.

Two recent analyses looked at retirement date decisions and uncovered two different insights. The first, a poll by Gallup, found that finances play a significant role. The second, a study by the Michigan Retirement Research Center at the University of Michigan, said cognitive abilities play a role. Both considered different data and sought to answer different questions, which explains some of the difference between the conclusions.

Gallup surveyed over 85,000 working adults. The research firm found that nearly 50% of working baby boomers (those born between 1946 and 1964) do not plan to retire until at least age 66. One out of 10 predicted that they will never retire. Not surprisingly, those who strongly believe they have enough saved plan to retire earlier (age 66) than those who strongly believe they have not (age 73). Job satisfaction also played a small, but not significant, role in the desire to retire later rather than earlier.

The Michigan Retirement Research Center analyzed data from the American Life Panel (ALP). The ALP is run by RAND and the University of Southern California. It surveys more than 6,000 adults age 18 and older. These researchers found a link between cognitive scores and retirement expectations. Higher cognitive scores were associated with later projected retirement dates and more coherent retirement expectations. The Michigan researchers also found a correlation between longer expected longevity and postponing retirement.

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