People who don’t save enough for retirement think working more will help – but experts warn this ‘exhaust valve’ is a dangerous gamble

Many Americans are relying on working longer to make up for their lack of retirement savings. According to a recent CNBC and SurveyMonkey poll, about 27 percent of workers plan to stay employed in their retirement years to supplement their income.

The survey, conducted in early August, included more than 6,600 US adults, split between retirees and those still working.

Don’t miss:

It’s a sound strategy at first glance. After all, staying employed into your 60s or 70s should allow you to continue earning money while giving your retirement savings more time to grow. But according to financial experts, this plan may not be as safe as it seems.

The risk of working more

While extending working years is appealing, it doesn’t always go according to plan. Health problems or unexpected layoffs can suddenly throw a wrench in those plans. “It sounds great on paper,” said Philip Chao, founder of Maryland-based Experiential Wealth. “But the reality could be very different.”

If workers are forced out of the labor market earlier than expected, they may find themselves struggling to stretch their retirement savings, and that’s where things can get complicated.

Trends: Charlie Munger said if you want to be rich, “find a way to get your hands on $100,000” – that’s what he meant.

Early retirement happens more often than you think

Data shows that many Americans end up retiring earlier than they intended. According to a Gallup poll, there is a consistent five-year gap between when people expect to retire and when they actually do. In 2023, for example, non-retirees anticipated working until age 66, but most retirees had left the workforce by age 62.

This trend is not new. Research from the Employee Benefit Research Institute (EBRI) shows that 46% of retirees left the workforce earlier than planned. So while a third of workers say they aim to retire at age 70 or later — or maybe never — only 6 percent of retirees manage to stay that long.

Trends: Number of “401(k)” millionaires up 43% over last year – Here are three ways to join the club.

The “exhaust valve” that may not work

Many Americans rely on the idea of ​​rejecting retirement as a kind of “exit valve” for financial security. However, as Chao says, “saying it and doing it are two totally different things.” He warns that this assumption could be a “very dangerous” bet.

The story continues

The reasons for those who retire earlier than expected are often beyond their control. According to the EBRI survey, 35% took early retirement due to health problems or disability, while 31% experienced company-related changes such as layoffs.

Working more seems like a simple solution to building retirement funds, but the reality is much more unpredictable. Life throws curves and relying too much on a late retirement may not be the safety net people think it is. Having other options is crucial because sometimes life has other plans.

Read on:

Next: Transform your trading with Benzinga Edge’s unique market trading insights and tools. Click now to access unique information that can put you ahead in today’s competitive market.

Get the latest stock analysis from Benzinga?

This article People Not Saving Enough for Retirement Think Working More Will Help — But Experts Warn This ‘Exhaust Valve’ Is a Dangerous Gamble originally appeared on Benzinga.com

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.