Conventional wisdom has it that workers plan their retirement around the amount of money they have saved. But nearly half of American workers plan to stop working on a specific date, regardless of how much they have for retirement. This is one of several myths debunked in new research from Fidelity Investments, which surveyed retirement savers and recent retirees on the nonfinancial factors that influence retirement decisions.
“It’s critical that employers understand these factors and design benefits to either retain or help transition pre-retirees based on their workforce strategy,” cautions Jim MacDonald, president of Workplace Investing at Fidelity Investments.
The results of the survey contradict many commonly held beliefs about how people view retirement and what factors contribute to their decision to retire (or not retire). Here are the top five myths:
People won’t retire until they have enough money. One of the more surprising results from the research is that nearly half of respondents don’t link their retirement to their level of savings. When asked if time or money was more important in their decision to retire, results were surprisingly split: Nearly half (49%) indicated their retirement date is tied to a specific date, not to money or a specific level of savings. They want to ensure they have enough time to enjoy their retirement, and if necessary, plan to adapt their retirement lifestyle based on how much they have saved. The other 51% of respondents said their finances would determine when they retire, and that they want to have enough savings to enjoy their retirement.
Retirement means spending time with your spouse. While a healthy percentage of men want to spend time with their wives (nearly 60%), a greater number of women are more interested in spending time with their grandchildren (nearly 70%) than with their husbands (43%).
NEXT: Struggling? Having to Work? Hobbies? More myths
Many retirees struggle to get by and live with regret. Despite the notion that today’s retirees are unhappy and forced to live frugally, 82% of recent retirees believe they retired at the right time, and 85% say retirement is the most rewarding time of their lives. More than three-quarters (79%) said it is easier than they thought to live comfortably in retirement: They were able to manage their savings and adapt their lifestyle based on their finances, if necessary. However, 36% admit they wished they had saved more, and 33% wished they had started saving earlier.
People work in retirement because they have to. When asked why they are working in retirement, 61% of respondents indicated that they like what they do, and nearly half (48%) said feeling valued was an important reason to continue working in retirement.
Retirement is all about travel and hobbies. While some retirees said they plan to volunteer and pursue activities they couldn’t get to while they were working, almost three-quarters (72%) said their top reason to retire was to have more leisure time—the freedom to do whatever they wanted, even if that meant simply relaxing and doing nothing.
Plan sponsors will find the myths and misconceptions exposed in the study especially useful, because they point to the need for new dimensions to the guidance and benefits they provide their employees, MacDonald observes. “This study tells us we need to address multiple aspects of an individual’s overall financial wellness as they prepare for retirement,” he says, “and not just look at the single dimension of retirement savings.”
Fidelity Investments’ “Decision to Retire Research” is a collaborative work of Fidelity and the Stanford Center on Longevity. The survey examined the non-financial factors that influence the retirement decision: how employees feel about their jobs and coworkers, their desire to spend time with family and grandchildren, and their overall health and the lifestyle they want when they leave the workforce.
The research culls insight from interviews conducted in Boston, Chicago and San Francisco in April, as well as an online survey of more than 12,000 defined contribution plan participants recordkept by Fidelity, ranging in age from 55 to 80 across all industries and income levels, who felt they had some control over their decision to retire. The research was completed in August 2015 by Greenwald & Associates, an independent research firm.