4 in 10 in U.S. retire sooner than they want, survey finds

Health concerns, loss of job are blamed

May 16, 2006|By JONATHAN PETERSON | JONATHAN PETERSON,LOS ANGELES TIMES

WASHINGTON -- American workers, who face growing financial pressure to stay in the work force, are far more likely to be forced into an early retirement than many expect, according to a study released yesterday.

Four out of 10 retired workers left their jobs sooner than they had planned, usually because of health problems or the loss of employment, according to the report by McKinsey & Co., which was based on a national survey of 3,086 people.

The survey also found that 45 percent of people who are currently employed planned to keep working past age 65. But among the retirees polled, only 13 percent said they had done so.

The findings raise fresh concerns about Americans' ability to afford a comfortable retirement. With more companies abandoning or freezing their pensions, many people say they plan to work longer to build up their nest eggs.

The reality "is quite sobering," said David Hunt, a senior partner at McKinsey. "Our research clearly shows that many people - and more than a few public policymakers - who are betting on simply working longer to compensate for a lack of current savings are setting themselves up for a rude awakening and a significantly poorer standard of living in retirement than they had expected."

For example, Rolf Marsh, a computer programmer, was 60 when he got a surprise tap on the shoulder from International Business Machines Corp. He had planned to work five more years to qualify for higher pension payments, then retire to enjoy a new phase of life, including visits to friends in Britain and other travels with his wife.

"I guess I was blind to the handwriting on the wall," said Marsh, who lives near Spokane, Wash. "I didn't think it was going to happen."

Marsh, now 63, has been frustrated in his attempts to prolong his career. "I looked for work when I first got out - basically, there's very little up here in Spokane - and the jobs I applied for I didn't get. My feeling was, it was because of age."

Marsh estimates that his pension is less than half what it would have been had he remained longer in the job. To boost his income, he signed up for Social Security earlier than planned, further scaling down his retirement pay.

Eventually, he and his wife took in an elderly boarder whom his wife cares for to make ends meet.

"It's been difficult," he said.

The McKinsey survey included retirees, for which it had a 3.2 percent margin of error, and people who are not retired, for which the margin of error was 2.4 percent. It was conducted in March and April among people 40 to 75 years old.

Among those who retired earlier than they expected, 47 percent gave health reasons and 44 percent pointed to job loss. The remaining 9 percent said they had to care for an ailing family member.

Wealth also had a big influence in how people's jobs come to an end. Workers with less than $50,000 in assets were most likely to be forced out of their careers due to health problems. Those who had more than $1 million pointed to job loss as the greatest reason for retiring.

Jonathan Peterson writes for The Los Angeles Times.

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