Retirement

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Doing what I want, when I want and as often as I want in retirement.

Female, age 55, in response to being asked what are you looking forward to

Retirement is a milestone that many adults anticipate with pleasure because it represents more time for family and friends, more time to pursue interests, and more time for leisure.¹ Social connections, a sense of purpose, and low stress are known to have positive effects on health. At the same time, the impact of retirement on well-being is mixed and depends on the individual, their job, their perceptions of retirement, their personal circumstances, and the reasons behind retiring, with those perceiving their retirement as forced less likely to experience benefits. Many people are working or planning to work during traditional retirement years for both financial and nonfinancial reasons, including a sense of purpose, engagement, and enjoyment. Related topics include:

• Expectations versus reality
• Outlook
• Drivers

Expectations Versus Reality

While most retirees do not currently work during retirement, most adults 50 and older who are not yet retired plan to work during their retirement years.

Over half (55%) of nonretired adults 50-plus expect either to work for pay during retirement (32%) or never retire (23%). Another three in ten don’t know whether they will work during retirement. Among current retirees, while only 12% are currently working, a quarter have worked in retirement in the past or plan to do so in the future. Half of retirees have not worked in retirement, and do not have plans to do so.

While over half of adults 50-plus have retired or anticipate retiring when they want to, the timing of retirement for current retirees is different than future retirees’ intentions.

While two-thirds of retirees 50-plus (66%) say they retired when they wanted to, three in ten (31%) said they retired earlier than they wanted to. The average age of retirement among retirees is age 62, whereas the average anticipated age of retirement among those who plan on retiring is 66.² Decades of research by Gallup finds that actual retirement age is consistently below anticipated retirement age.³ The most common reason for retiring earlier than desired is health (44%) followed by downsizing/layoffs at work (19%). In contrast, while over half (56%) of those who plan on retiring but are not retired yet anticipate retiring when they want to, a third (35%) anticipate retiring later than they want. By far, the most common reason for anticipating retiring later than desired is financial (90%).⁴ This contrast between current and future retirees could represent shifting norms but may also signal that unexpected circumstances, such as health changes, may disrupt plans.

Outlook

Half (51%) of nonretired adults who plan on retiring look forward to retirement to a very large (31%) or large (20%) extent. Another third (31%) look forward to it to a moderate extent.

Women are more likely to look forward to it than men. Those who do not plan on working during retirement are much more excited for retirement than those who are planning to work.

Overall, current retirees report that retiring has had a positive effect on their well-being.

While three out of five retirees report experiencing a positive effect, a quarter indicate experiencing a mixed effect. Lower-income adults and those who retired earlier than they wanted are more likely to report a mixed or negative effect, likely related to financial strain and health challenges.

Drivers

For those working during retirement, planning to work, or not retiring at all, financial considerations inform this decision, but so do nonfinancial ones.

Three quarters of those working or planning to do so during retirement years give at least one financial reason, while almost three in five cite keeping themselves active and half cite purpose. Those who are not retired but plan to work during retirement years are more likely to give a financial reason than those who are currently working during retirement. Current retirees who are working are more likely than those not retired to give a nonfinancial reason.

Freedom, rest and relaxation, and time for family, friends, and personal interests are major reasons not to work during retirement, but health status is also a critical reason.

Although health status was not a response option to this survey question about reasons for not working or planning to work during retirement, almost a quarter of current retirees wrote in another option to this survey question, with a significant number (36) specifying a disability or health reason for no longer working, meaning “disability or health reason” should have been a response category as one’s ability to work physically has an impact that should be quantified more precisely.

Many who cite “another” reason for not working have a disability or health-related reason.

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A physically demanding job has taken a toll on my health and stamina.

Female, 63

Source: AARP/Foresight 50+ Retirement Omni, December 2023 (Unpublished). Survey conducted in English.

Key Takeaways

• Many adults 50-plus anticipate and enjoy the freedom that retirement brings. Nonretired adults 50-plus who plan on retiring are looking forward to it a great deal, and most retirees see benefits to their well-being and mental health as they have time to focus on their families and personal interests. Those who do not work during retirement cite prioritizing freedom and relaxation. However, this retirement experience is not universal.

• Health problems force many to stop working before they intend to, which may lead to worse outcomes in retirement. There is a persistent gap between actual and anticipated retirement age, with health issues/disability a leading reason. This loss of control over the decision to retire is associated with lower mental health in retirees. Health problems also keep many adults from working during retirement.

• Financial security impacts retirement experience. A third of nonretired adults 50-plus anticipate retiring later than they would prefer for financial reasons, and lower income adults more often associate retirement with financial hardship. Most of those who continue working during retirement cite at least one financial reason. Nonfinancial reasons, such as work providing a sense of purpose and engagement, also influence decisions to continue working during retirement, or not retire at all.