The COVID-19 pandemic has had a major impact on how Americans view work and retirement — none more so than with younger generations. In fact, they now expect to retire earlier than previously planned, according to a new study from Northwestern Mutual.
Millennial and Gen Z respondents both said they plan to retire before the age of 60, with millennials giving an average retirement age of 59.5 and Gen Z giving an average age of 59.4. That compares to an overall average of 62.6, down from 63.4 last year.
By contrast, Gen X respondents provided an average expected retirement age of 64.3, while Baby Boomers gave an average age of 68.3.
The 2021 Planning & Progress Study, conducted in March by The Harris Poll on behalf of Northwestern Mutual, polled 2,320 Americans aged 18 or older. More than one-third (35%) of respondents said COVID-19 either moved up or pushed back their target retirement age, with 24% saying they plan to retire later than previously planned and 11% saying they plan to retire earlier.
“The economic environment created by the Covid-19 pandemic has caused a lot of people to re-examine their financial lives,” Christian Mitchell, executive vice president & chief customer officer at Northwestern Mutual, said in a press release. “For some, the prospect of an early retirement appears more achievable, while others are adjusting for delays.”
Of respondents who plan to delay retirement because of the pandemic, 39% said they’ll move their planned retirement age back three to five years. More than a third (35%) said they’ll push it back 10 years.
Remote working seems to have played a part in convincing some folks to delay retirement. More than half (55%) said they want to work and save money because of “additional flexibility” with their workplace. Half cited concerns about rising costs such as healthcare and/or unexpected medical costs.
For those who plan to retire earlier than planned, nearly half (48%) said they’re moving up their retirement date by three to five years. Here are the top reasons cited for moving up the target retirement age:
Wanting to spend more time with loved ones (42%)
Focusing on hobbies/priorities outside of work (33%)
Realizing their “personal mission” is more important than saving more money (29%)
Work situation has changed, such as being laid off (28%)
COVID-19 hasn’t only impacted the retirement plans of Americans, however. It also has impacted their retirement savings. As GOBankingRates previously reported, only 36% of non-retired adults in the United States believe their retirement savings are on track, according to a study from the Federal Reserve.
Another study conducted by Age Wave and Edward Jones found that about 14 million Americans stopped contributing to their monthly retirement accounts during the pandemic because they needed to use that money for essentials instead.