Prudential: Working in Retirement May Be the New Norm According to PGIM Investments Study

Originally Published by Prudential.

Few current retirees take a new job in their golden years—but more than half of future retirees expect to continue working during retirement, driven by uncertainty about Social Security and their own financial preparedness, a new study from PGIM Investments reveals. PGIM Investments is the global manufacturer and fund distributor of PGIM, Inc., the $1 trillion global investment management business of Prudential Financial, Inc.


The study, the 2018 Retirement Preparedness Study: A Generational Challenge, commissioned by PGIM Investments and conducted by The Harris Poll, found that while only 6 percent of today’s retirees work, 52 percent of pre-retiree Baby Boomers, 58 percent of pre-retiree Gen Xers, and 43 percent of pre-retiree Millennials expect to take on a full- or part-time job during retirement. These expectations may be linked to pre-retirees’ decreased reliance on Social Security—for example, only 51 percent of Millennials expect to receive these benefits at all.

“While changes in retirement expectations are often driven by pure economics, these study results also suggest a mind shift in how people are thinking about retirement. However, pre-retirees’ actions don’t always back up their goals,” said Stuart Parker, president and CEO of PGIM Investments. “To help them bridge this gap, the asset management industry will need to rethink the way that it does business and bring products and services in line with changing customer needs.”

According to PGIM Investments’ study:

The “dream retirement” is changing

  • Pre-retirees are more likely to base their decision about when to retire on their wealth rather than their age with half of Gen Xers and 62 percent of Millennials saying they will retire when they have saved enough money. Current retirees decided when to retire largely based on their age and eligibility for Social Security and pensions.
  • Millennials are more likely to start a business in retirement (20 percent) than Gen Xers (9 percent) or Boomers (four percent). Nearly four in 10 pre-retirees (39 percent) say they want to volunteer after they retire.
  • More than half (51 percent) of current retirees say they’re “living the dream.”On average, these individuals started saving six years earlier than other retirees. Compared with those who aren’t living their dream retirement, these individuals are more likely to have pensions and diversified sources of income. They also are more likely to have been able to retire at their planned retirement age.

Pre-retirees need to evolve their saving habits

Recently, trustees for Social Security announced that the program is operating at a deficit and will need to pull money from its reserves for the first time since 1982. Pre-retirees may not be prepared to fill the gap, PGIM Investments’ study finds:

  • Social Security benefits are the most critical source of income for 61 percent of retirees. By comparison, only 70 percent of Gen Xers and 51 percent of Millennials expect Social Security benefits when they retire.
  • Millennials are least likely to rely on Social Security for retirement income and are more heavily invested in cash and less invested in equities; nearly one in three aren’t saving for retirement at all.
  • More than half (53 percent) of pre-retirees are unsure how much they need for retirement. Gen Xers have the highest estimates of the savings they need, but almost one in five aren’t saving for retirement at all.
  • Pre-retirees need to expect the unexpected—51 percent of retirees say they retired earlier than expected. Of that group, half say they retired more than five years earlier than planned. In many cases, the reasons were involuntary, including health problems (29% of the early retirees), layoffs or restructurings (14%), the need to care for a loved one (13%), and the inability to find a new job (10%).

To address growing consumer need for retirement income planning, Prudential Financial, along with 23 other leading financial services organizations, established the Alliance for Lifetime Income to help educate Americans about the value of having protected income in retirement.

For more study results, download the report: 2018 Retirement Preparedness Study: A Generational Challenge.

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