More Americans plan to delay retirement: surveys
BOSTON (Reuters) - More Americans plan to delay retirement following steep drops in the value of their savings accounts, data from several new surveys show.
A study to be released on Thursday by Canadian insurer Sun Life Financial Inc found 65 percent of U.S. workers plan to stay on the job at least one more year than planned, an 11 percentage point increase from a similar survey in January.
"There is a huge drop in confidence that has taken place," because of the fall of stock markets since 2007, Wes Thompson, president of Sun Life's U.S. division, told Reuters in an interview. At the same time, longer life expectancies mean individuals need to build up more savings before they stop working.
"It's not retire at 65, get ready to die at 70," Thompson said.
The survey was conducted in September of 2009, when stock markets had already begun their recovery.
Also, a forthcoming study by Prudential Financial Inc found that 66 percent of respondents over the age of 45 said they may need to work longer than expected to afford retirement.
And a recent survey by mutual fund giant Vanguard Group Inc of Pennsylvania found that 45 percent of American investors said putting off retirement was "possible" and the figure was nine percent points higher among people in their fifties.
It was the first year Vanguard has done the survey and the results were a striking reminder of the psychological impact of market declines, said Steve Utkus, head of Vanguard's Center for Retirement Research.
"There's this idea that more work is a way to remedy market losses or lack of savings," he said.
An obvious follow-up question he plans to explore is whether investors who do not plan to work longer feel they still have enough for a comfortable retirement -- or whether they have simply lowered their expectations.
Either way, the results have huge implications both for the way Americans save and for how much money they plan to put into the $10 trillion U.S. mutual fund industry, or invest with insurers and other asset managers.
Utkus and Thompson both noted investors might actually abandon plans to work longer if stock markets continue to recover and restore savings. But both said the figures were a reminder of how the shift to defined-contribution retirement plans such as 401(k)s has made it harder to forecast the behavior of whole generations of American savers.
Unlike traditional pension plans, it is possible for workers to delay their contributions to 401(k)s when they need to spend more of their paychecks, or take withdrawals when times are tough.
In a third study, released on Wednesday, mutual fund industry trade group The Investment Company Institute reported that 4.6 percent of 401(k) plan participants stopped making contributions during the first six months of this year -- up from 3.7 percent who did so during all of 2008.
But fewer plan participants took hardship withdrawals from the plans in the first six months of 2009 -- 1.8 percent, down from 3.9 percent for all of 2008.
(Reporting by Ross Kerber; editing by Andre Grenon)
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