The last three years saw a unique rise in the number of early retirements. This was a result of health concerns during the pandemic, the “Great Enlightenment” for the global workforce and generous government aid. However, according to our latest Workmonitor study, workers today have a decidedly different outlook.
Our 2022 Workmonitor survey revealed that 61 percent of respondents believed they could retire before age 65. This year, only half believe this. What has changed? With a shaky global economy, rising inflation and a reduction in federal aid, a new trend is emerging among the workforce: unretirement.
who is coming back?
In an ideal world, 33 percent of 2023 respondents would retire before the age of 60. But in their current situation, most no longer feel they can. In fact, 18 percent are currently planning to delay retirement specifically to help with the rising cost of living.
Higher energy and household costs that occur with an increased cost of living can quickly eat into savings and retirement accounts. Given today’s economy, more elderly workers are returning to the workforce either full or part time. In fact, UK labor market data from last year shows a record number of people aged 65 and older were looking for work or already employed.
In Japan, the number of people aged 65 and older with a job rose for the 18th year in a row. However, just 15 percent of survey respondents there plan to retire by 60. And 8 percent don’t want to retire at all, a number five times the global average.
In the U.S., household wealth reached a record $150.1 trillion before falling three consecutive quarters. This was a significant blow to those planning to retire early, forcing many to stay employed.
more than just finances
A paycheck isn’t the only reason older workers are returning. A significant number fear they’re missing out once they leave the labor market. Work can provide meaning and purpose, and some who retired early during the pandemic may feel they weren’t actually ready to leave for good.
According to our survey, 32 percent of workers overall believe they need work in their lives. The social interaction and mental challenges a job brings can keep people feeling connected and give them a sense of belonging that’s hard to replace.
Still others feel that waiting for a particular milestone is important before retiring, especially now that work is more predictable following the pandemic. Lastly, some feel their employer couldn’t get by without them, something the present economy may factor into as well.
when will they retire?
Employers around the world are already contending with an aging workforce. In fact, population demographics have millions more leaving the labor market in this decade. The economy will continue to factor in, but planning for this shift regardless can alleviate the vacuum they’ll leave behind.
To start, our survey reveals when people would like to retire. 2023 results show that 33 percent of respondents would like to retire before age 60 and another 25 percent are aiming to do so between the ages of 60 and 64. This means that even with outside factors such as high inflation, most people want to be out of the workforce earlier than the latest trends show.
age and geography variations
Notably, Gen Z and those aged 55 and over are least likely to view financial constraints as the reason they won’t be able to retire when they want to. The generations in between — ranging in ages from 25 to 54 — are more worried about the resources they’ll need in order to leave the workforce.
Geography factors into both beliefs and sentiment. For example, in India and Latin America, workers believe they can retire earlier than other regions. In fact, more Latin Americans (26%) want to retire before age 50, a significantly higher percentage than the rest of the world. By contrast, only 9 percent of Northwestern Europeans want the same. In fact, 59 percent of Dutch respondents believe they won’t be able to retire until age 65 to 69.
help your employees retire
Regardless of current trends, shifting demographics mean retirement will continue to be a challenge for both talent and the companies they work for. Here’s how you can help:
meet their needs
Ensure your employees have a range of options to prepare for retirement. This can include incentivized savings plans and matching contributions.
promote financial wellness
Incorporate financial education into your learning and development strategy. Consider offering additional incentives to boost participation.
Demographic changes will cause talent scarcity to grow in the coming years. To prepare, create transitional roles for those nearing retirement so they move from full to part time before they fully retire.
With more people heading back to work or delaying retirement, the job market looks different than it did even a year ago. Learn more about how you can navigate today’s shifting workforce in our 2023 Workmonitor report.