The Center for Retirement Research at Boston College isn’t usually the place to go for retirement happy talk. Its National Retirement Risk Index classifies 52% of working age households as at risk of not being able to maintain their living standards when they stop working. Worse, it figures that if all workers had started out with the student debt the Millennials carry, 56% would be at risk.
But a new CRR issue brief reaches a seemingly upbeat conclusion: the vast majority of folks who retire aren’t being pushed out of the workforce by ill health, bad bosses, or age discrimination . Instead, they’re being pulled into retirement by the allure of spending more time with family and on other activities they enjoy.“People are being pulled towards positive things. That’s what keeps people at work or pulls them into retirement,’’ says Steven A. Sass, the CRR economist who wrote the new brief.
To the average reader that might seem like a “well, duh” conclusion. Isn’t that the whole retirement warm and fuzzy dream? The reason you’re supposed to be saving now—to enjoy life and maybe do some good later? (In the Forbes retirement guide, we’ve helped feed that dream, featuring the best places to retire to pursue your passions and celebrating executives who quit a career job to do something with social impact.)
Yes, but those of us wrapped up in the financial side of retirement planning tend to be perplexed by why people retire when they’re still able to work and when some fancy calculator shows staying on the job another year or two would substantially increase their odds of maintaining their living standards through old age. And it’s not just the calculators, which many workers don’t run, or choose to ignore. While average retirement ages have been rising for the past two decades, many workers continue to retire before they themselves say they plan to. Yet the “external shocks’” economists can measure–bad health, job loss, etc.—explain only a small fraction of those earlier-than-planned departures, other CRR economists found in a paper published last year. Something else is going on.