The shifting shape of work is transforming not only the American vision of employment, but also retirement, according to new research.
After a several-year trend of a majority wanting to work as long as health permits, now just 45% have this as a goal. More households (35%) than at any time in the past seven years “want to stop working/retire at a certain age” – a trend that could be influenced by the expanding “gig” economy, one characterized by the prevalence of short-term contracts or freelance work as opposed to permanent jobs.
About one-third or 27.6 million out of 85 million U.S. households already have at least one partner employed part- or full-time in the gig economy – and most have chosen that employment. In fact, the report by Hearts & Wallets indicates that all but 5.9 million say they are employed by choice in the gig economy.
The report finds that those in younger life stages (ages 21 to 39) would prefer full-time employment, but only 30% say they would choose that option. For gig economy workers in their 40s, 50s and early 60s, satisfaction rates are in the low 80 percentiles. This is a universe that includes fully employed seniors age 65 and above, of whom 92% say gig economy employment is a choice.
Even in retirement, all types of work are growing factors, according to the report. One-third (36%) of future retirees expect to have employment income, up 7 percentage points from last year, with employment making up a quarter of their income.
Hearts & Wallets notes that the portion of U.S. households saving 4% or more rose to almost half (48%) last year, driven by the under-$100,000 wealth group. Still, one in four households saved nothing at all or spent more than they earned, and one in four mid-life and post-retirement households are not adding to savings. Only one in four households saved more than 10% of their income.
Looking more comprehensively at U.S. retirement readiness, about 6 in 10 households expect to use personal assets for retirement income, though most are underfunded using traditional wealth measures. Hearts & Wallets’ “Retirement Reachability Ratio” measures current assets relative to assets needed to fund the role that each household anticipates for personal assets.
The pair of Hearts & Wallets reports, “Income & Net Wealth” and “Retirement & Funding,” are drawn from the section of the firm’s Investor Quantitative (IQ) Database analyzing the behaviors and attitudes of more than 5,000 households.