Goal of retirement is proving elusive, Sun Life survey finds

Goal of retirement is proving elusive, Sun Life survey finds
Investors are recognizing that they will have to work longer
February 8, 2009, 6:01 AM EST
By Lisa Shidler

Rocky financial markets have reduced portfolio values and delayed retirement for more than half the people who responded to a survey from Sun Life Financial.

Among the 54% of people who intended to delay their retirements, 24% reported that they would have to work more than five years longer than they had planned, 19% would have to work three to five years longer, and 11% would have to work one to two years longer.

Those were the results of Sun Life's Unretirement Index, which tracks the attitudes and expectations of American workers. People who work at least 20 hours a week after the age when they are eligible to receive Social Security benefits attain the dubious distinction of living to the ripe old age of "unretirement."

The survey was conducted Dec. 3-14 and reflects the results of interviews with 1,200 individuals ages 30 to 66 who worked at least 20 hours a week when they completed the study.

A desire to earn enough money to live well drove the decision to continue to work, said David Jacobson, associate director at Toronto-based Sun Life Financial, who also helped craft the survey. Last August, when the index was unveiled, respondents reported that they planned to continue to work past 67 so they could stay mentally sharp.

Mr. Jacobson is pleased that 90% of respondents said that they hadn't withdrawn money from retirement savings accounts in the previous 90 days.

"I thought it'd be higher," he said, "We're very happy about that."

Fully 48% of respondents said they planned to retire by 67, compared with 52% in the earlier survey.

To be sure, the survey responses were consistent with the experiences of advisers, who reported that clients are putting their retirement dreams on hold.

"More are considering delaying retirement at this point," said Mark Farrell, director of advanced planning for McLean (Va.) Asset Management Corp., which oversees more than $300 million in assets. "They're seeing how things shape up, and are being flexible,"

In recent months, clients have been increasingly concerned about whether they can afford to retire.

In response, Mr. Farrell has met with them to discuss retirement projections based on the market losses. Clients who reduce spending by $10,000 a year have a better probability of retiring on schedule.

In addition, Mr. Farrell asks retirees to reduce spending by as much as $10,000 a year.

"For folks nearing retirement, if they can cut spending, it can in-crease the probability for retirement quite a bit," he said.

The concern from clients about retirement has increased as the market has worsened.

"I think there were people who were wondering whether or not the market would make a quick bounce upwards," Mr. Farrell said. "It's starting to soak in that this may stick around for awhile."

The turbulent markets have forced advisers to re-run the numbers, said Ron Kelemen, a certified financial planner with The H Group Inc. in Portland, Ore., which has $92 million in assets under management. "On average, we're saying this does mean another year or two of work before retirement."

About 40% of clients who are five years away from retirement are strongly considering continuing to work because their financial situation has deteriorated over the past several months. Some retirees are considering going back to work.

By contrast, those clients who can still retire on time are those who were overprepared for retirement.

E-mail Lisa Shidler at lshidler@investmentnews.com.

Copyright Â© 2009 Crain Communications Inc.