The pandemic has changed many Americans’ retirement plans, most notably those of younger generations, as Gen Z and millennials are now saying they intend to retire in their 50s, according to a new survey.
The new survey by Northwestern Mutual shows that because of COVID-19, 35% of Americans have either moved up or pushed back their target retirement age. Almost a quarter, 24%, plan to retire later than previously expected, while 11% plan to retire earlier, the survey noted.
Most notably, the findings also revealed that the two youngest generations of adults expect to retire before the age of 60 — with Gen Z respondents at 59.4% and millennials at 59.5%. Overall, the average age people expect to retire is 62.6%, down slightly from 63.4% last year, according to the survey.
Almost half (48%) planning to retire earlier than expected say they are moving up their timeline by three to five years.
The top reasons cited for moving up their target retirement age include: Wanting to spend more time with their loved ones (42%), focusing on hobbies/priorities outside of work (33%) and realizing their personal mission is more important than saving more (29%). Another reason revolved around their work situation changing, at 28%.
Victor Chatelain, financial associate at Arch Global Advisors, told GOBankingRates that millennial investors will need to take into consideration that their expenses may change over time, including having a family, if the goal is retirement in their 50s.
“Two major caveats are the potential tax implications, which many millennial investors either do not yet understand, or have not yet considered, with the decision to take a much more aggressive approach while they are young,” Chatelain said. “The second caveat, of course, is the potential for the market to take a downturn following what has been a 10+ year bull run. It is important in both cases, however, to consult a tax professional and an advisor, respectively, to create a financial plan, which will take potential tax consequences or market downturns into consideration over the long haul,” he advised.
On the other hand, for those planning to delay retirement due to the economic impacts of the pandemic, 39% said they’ll push out retirement three to five years, while a whopping 35% say their timeline for retirement has shifted back more than 10 years.
The top reasons why people are delaying retirement include: wanting to work and save money given additional flexibility with their workplace (55%), concerns about rising costs such as healthcare and/or unexpected medical costs (50%), having to dip into retirement savings (24%) and taking care of a relative/friend; responsible for additional dependents (14%).
The early retirement trend was also reflected in a recent New York Fed survey, which found that the average expected likelihood of working beyond age 62 went down to 50.1%, from 51.9% in July 2020, the lowest reading since the start of the series in March 2014. The average expected likelihood of working beyond age 67 also declined to 32.4% from 34.1% in July 2020.
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Last updated: October 26, 2021
This article originally appeared on GOBankingRates.com: Millennials and Gen Z Want To Retire by 60 — One Expert Points Out Major Obstacles to Their Plans