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A Cautionary Tale About Early Retirement Dreams

James Melton Reporting

More than one of every five Americans age 62 and older who expected to retire early are still working, according to a recent analysis of the prevalence of unanticipated work in retirement and its consequences for the well-being of older adults.
The analysis, conducted by University of Michigan sociologist Philippa Clarke, was presented in Montreal at the annual meeting of the American Sociological Association.

Clarke, a researcher at the UM Institute for Social Research (ISR), analyzed longitudinal data from the ISR Health and Retirement Study – funded by the National Institute on Aging – to examine how unfulfilled expectations about early retirement affect life satisfaction.

In all, nearly 30 percent of respondents 62 and older were still working for pay, Clarke found. While Clarke emphasized that the analyses were still preliminary, she identified three distinct patterns among those who were still working: About 37 percent of people, mainly older men, had expected to take early retirement.

If they ended up working beyond age 62, their life satisfaction was lower than that of retired peers with similar recent labor force activities, health, and socioeconomic and demographic factors. About 59 percent of people, mainly older women, had generally expected to be working after age 62.

Their life satisfaction was also lower than peers who had stopped working. Younger and less educated respondents who tended to be ambivalent about the probability of retiring early seemed to be the one group that benefited from later-life work. This group comprised only about 4 percent of the sample.

Their life satisfaction was much higher if they stayed at work past age 62. For the study, Clarke and colleagues analyzed panel data from a representative sample of 1,044 Americans who were ages 51-61 in 1992, and who were interviewed every two years through 2004.

To assess life-satisfaction, respondents were asked to what extent they agreed with the following statements:

- "In most ways my life is close to ideal"

- "The conditions of my life are excellent"

- "I am satisfied with my life"

- "So far, I have gotten the important things I want in life"

- "If I could live my life again, I would change almost nothing."

"Older workers approaching retirement have faced notable and dramatic changes in the structure of state and corporate pension plans and benefits," Clarke said.

With recent and future changes in Medicare and Social Security, she noted, older workers who have long expected to retire early are being forced to reverse their decisions and work longer than they expected.

"Although these analyses are preliminary, the patterns are quite clear that the move towards a so-called ownership society in the U.S. has consequences for the well-being of older workers who may have been operating under a different set of assumptions when planning for their retirement," she said.

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