Study after study shows American workers are woefully behind on their retirement savings. For many, there’s virtually no way they’ll have enough money to retire, barring a winning lottery ticket, a surprise inheritance or some other unexpected windfall. Some have resigned themselves to the idea that they will have to work well into retirement to make ends meet, but this expectation may not align with reality, according to the Employee Benefit Research Institute's (EBRI) Retirement Confidence Surveys. (See also: The Impact of Continuing to Work in Retirement.) 

Retirement Expectations vs. Reality 

In 2018, the EBRI found that while 68% of workers said they expected to work for pay in retirement, only 26% of retirees actually did. This trend has persisted for decades. Since 1998, the annual survey has shown that more than two-thirds of workers planned to work for pay in retirement, while less than 40% or retirees did.  

The EBRI also found that although workers seem to expect to have a longer work life, the median retirement age has remained at 62 for a number of years. In 2017, while 23% of workers expected to work until the traditional retirement age of 65, only 9% of retirees reported doing so. And while 38% said they planned to work till age 70 or older, or possibly never retire, only 4% of retirees reported this was the case for them. The trend is clear: "The [Retirement Confidence Survey] has consistently found that a large percentage of retirees leave the workforce earlier than planned."

Why are people leaving the workforce unexpectedly? In the majority of cases, it had to do with health issues, with 41% citing health problems or disability. Others cited changes in the workplace, such as downsizing or closings (26%); caring for a spouse or other family members (14%); and changes in skills required to perform their job (4%). It’s not all negative, however. Some said they could afford it (24%), and others said they wanted to do something else (10%).

Save Now Even If You Plan to Work Later

It's important that you don't “kick the can down the road,” as the cliché goes. Believing that you’ll solve your retirement problems by working longer rather than saving more now may not pan out.

Just like with projected retirement age and plans to work in retirement, the EBRI found American workers have unrealistic ideas about how much income their retirement accounts will provide. In 2018, 53% of people in the workforce said they believed their employer-sponsored retirement plan would be a major source of income, but only 24% of current retirees said that was the case for them.

Only 7% of workers said they are "very confident" the Social Security system "will continue to provide benefits of at least equal value to the benefits received by retirees today." However, 67% of retirees said Social Security is a major source of their income. Of course, Social Security is in better shape now than it may be down the road. According to the Social Security Administration's 2018 Trustees Report, the funds will be depleted in 2034, and some analysts predict they could dry up sooner. When they are depleted, the agency notes scheduled tax income will only be able to cover about three-quarters of scheduled benefits through the year 2092. 

So, you need to save as much as possible while you're still working. If you can, take advantage of catch-up contributions permitted to your IRA and 401(k).

Beating the Trend

If you plan on working past the traditional retirement age, there are a few steps you can take to try to beat the trend.

The first step should be to do what you can to stay as healthy as possible by eating right and exercising. Less than a quarter of  Americans 18 or older met physical activity guidelines for cardiovascular and muscle-strengthening activity in 2017, according to the Centers for Disease Control and Prevention. Many chronic illnesses – including Type 2 diabetes, heart disease and some cancers – are directly related to lack of exercise. Not only can a serious illness force you to leave the workforce earlier than expected, but health care costs can quickly zap your savings. 

Next, think about what you would do to earn income in your later years. If you’ve spent your life in a career that involves a lot of physical activity, it will likely become harder to perform that job as you age. Think about becoming a consultant in your field, entering management or finding another career that doesn’t involve as much physical labor. (See: 10 Money-Making Jobs for Retirees.)

If you're in a job that lends itself to consulting, consider doing what you can to build visibility in your field (becoming active in a professional organization, for example) and doing some consulting before you're ready to retire. (For more ideas, see: Don't Retire Early – Change Careers Instead.)

The Bottom Line

As if Americans needed any more bad news about retirement, statistics show the current workforce has some unrealistic expectations about what those years will hold. Even if you plan to work well past the traditional retirement age, there’s strong evidence that your health or some other impediment may prevent you from doing so. Start planning today. Figure out how to save more by cutting expenses and investing a higher percentage of your income in your retirement accounts.