April 16, 2012 /PRNewswire/ -- New research from
T. Rowe Price (NASDAQ-GS: TROW) shows that most investors (69%) between the ages of 21-50 plan to work either part-time or full-time during their retirement years. Among those who plan to work at least part-time, most (75%) will do so because they want to stay active and involved; only 23% believe they will do so because they will not have saved enough money.
These findings are highlighted in a
T. Rowe Price survey about Individual Retirement Accounts (
IRAs) and the investing practices of Generation X (ages 35-50 for the purposes of this research) and Generation Y (ages 21-34). The study was conducted online in
December 2011 by Harris Interactive on behalf of
T. Rowe Price among 860 adults aged 21-50 who have at least one investment account.
"Beginning with the Baby Boom generation, a new vision of retirement has emerged – one that includes an active lifestyle and, for many people, continued work or even a second career," said
Christine Fahlund, CFP®, senior financial planner with
T. Rowe Price. "This survey suggests that, looking ahead, many younger investors are ready to adopt this relatively new approach to retirement, as well. It's encouraging that they plan to do this as a choice and not out of financial necessity. Of course, their ability to be flexible about their retirement date will require getting an
early start on their savings."
Other survey findings among investors aged 21-50:
- The mean age at which they plan to retire is 62.
- The mean number of years they expect to live in retirement is 22.
- 77% expect tax rates will increase between now and when they retire.
- 43% expect a part-time job to be a source of income during their retired years.
"Successfully navigating retirement is, in many ways, an exercise in
striking a proper balance
between things like work and leisure, saving and spending," Ms. Fahlund said. "We often recommend that people in their 60s who are on track with their savings not wait until they retire to start experimenting with activities they were planning. The
transition from career to retirement
can be stressful and many people struggle with it. Taking a practice run while still receiving wages and benefits can help pre-retirees financially, emotionally, and psychologically."
Many pre-retirees have no idea what they want to do and may try something that they'll want to change later, Ms. Fahlund said. "We believe that beginning to incorporate more leisure in your 60s, when you're still likely to be in good health can be a fun way to make the transition from work to retirement easier," she added. "By
working a little longer and playing
, investors can maintain earned income to fund their activities, hold off on tapping their nest eggs earmarked for retirement, and
defer taking Social Security payments
. Delaying Social Security, in particular, positions people to have
potentially considerably higher guaranteed payments
– adjusted annually for inflation – for the rest of their lives."
An important caveat, Ms. Fahlund noted, is that investors who choose this approach to retirement generally should use some of the money from their additional years of salary for the funding they need, not their accumulated savings. In addition, investors should strive to put their financial houses in order before they fully retire, including paying off their mortgages and other debts and purchasing any big-ticket items they think they might need or want in retirement.