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Physical Workers’ Retirement Confidence Not Supported by Savings Habits

Industry Trends and Research

A majority of physical workers are confident about retiring with a comfortable lifestyle, but few appear to be on track to meet their estimated retirement income needs, according to a new global research report.  

Physical workers are more likely than non-physical workers to say they are very/extremely confident (31% versus 23%) in their retirement prospects. That confidence may be skewed, however, by the fact that these physical workers tend to be relatively young and majority male. 

To gain a better understanding of the retirement-related risks faced by physical workers, research contained in “The Unique Retirement Challenges of Workers in Physically Demanding Jobs” is based on a survey of so-called “physical workers” in 15 countries spanning the Americas, Europe, Asia, and Australia. It was conducted in collaboration among the Aegon Center for Longevity and Retirement (ACLR), Transamerica Center for Retirement Studies (TCRS) and Instituto de Longevidade Mongeral Aegon.

In the survey, physical workers self-identified as having jobs that involve extensive or sustained periods of physical activity, such as agricultural roles, construction and metal workers, miners and drilling, manufacturing and machine operators, emergency responders and cleaning crews.

Even though physical workers appeared to have a higher level of confidence, the survey found that few workers in physically demanding jobs are actually on track to meet their estimated retirement income needs. 

When asked what annual gross income they expect to need in retirement as a percentage of their current earnings, just 33% of respondents are on track to achieve about three-quarters or more of their required retirement income. Only 21% of respondents feel they are on course to achieve their full desired income amount, while 30% say they don’t know if they are on course. 

Moreover, nearly 6 in 10 physical workers envision some form of work in retirement and only a third predict they will stop work altogether and enter full retirement. As to those who plan to continue working, the majority (49%) envision a flexible transition to retirement, while the remaining 10% say they will continue working as they currently do.

“Due to the strenuous nature of their work, people in physically demanding jobs are at risk of aging out of their occupations before they are financially ready to retire,”notes Catherine Collinson, CEO and president of Transamerica Institute and TCRS, and executive director of ACLR.

Collinson suggests that workers in physically demanding jobs should consider doing more to prepare themselves for longer working lives and retirement. In addition, she emphasizes that employers also play a critical role by providing retirement benefits and by offering pathways from physical to non-physical work with the necessary training to pursue them. 

Time is on Their Side

The good news is that these physical workers tend to be younger and time is on their side to take steps to improve long-term employability and retirement prospects.

Among those who self-identified as physical workers:

  • Most are men (66% in the U.S.)
  • Most are under age 40 (in the U.S., they have a median age of 36, with 45% under age 35) 
  • Nearly half have an undergraduate degree or higher (49% in the U.S.)

In the U.S. and globally, physical workers expect to retire at age 65 (median) and nearly 3 in 10 expect to fully retire after age 65 (28% in the U.S.). However, the survey findings reveal it may be easier said than done. Only 18% of physical workers are currently age 55 or older (U.S. and global). And even fewer are currently age 65 or older (6% in the U.S.), suggesting that as they grow older, these workers are either shifting into less physically demanding jobs or leaving the workforce. 

Reinforcements Needed

While more physical workers reportedly are offered a retirement plan by their employer, relatively few say that their employer offers services to help them prepare for retirement. 

According to the findings, more than half of physical workers are offered retirement plans (55%, either with or without employer contributions), compared with non-physical workers (49%). But in terms of measures to help workers prepare for retirement, only 21% of physical workers say their employer offers them annual retirement statements and 17% are offered an annual retirement plan income forecast. 

The study further shows that only 40% of physical workers have a backup plan in the event they are unable to continue working before reaching retirement age. The other 60% say they either have no backup plan or say they don’t know.

“Given the physically demanding nature of their work and the risk of health-related issues or injury, it is critical for physical workers to have both a retirement strategy and backup plan if they find themselves being forced into retirement sooner than expected,” the authors emphasize. 

The report is based on findings from the 7th Annual Aegon Retirement Readiness Survey, which is based on a survey of 16,000 respondents including 4,800 physical workers in 15 countries. The online survey was conducted in respondents’ native languages between Jan. 29 and March 30, 2018.

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