A new Vanguard study shows that the majority (61%) of American workers age 40 to 69 conceive of retirement as a period involving a “downshifting” from full-time employment to part-time employment rather than a period of full-time leisure.  Workers’ choices about retirement are driven primarily by financial resources, but also by other factors such as health and personal preferences.
 
While the average American man retires at age 63, 45% of Americans age 65 to 69 and 25% of individuals age 70 to 74 are employed in some capacity.  Full-time work drops to 62% for workers in their late 50s, 46% for individuals age 60 to 64, and 17% for those age 65 to 69.
 
Vanguard determined that six distinct paths exist for how individuals age 55 to 69 have made the transition from work to retirement.  The paths chosen were affected by financial events; savings habits; health status; and demographic factors such as age, gender, income education and marital status.
 
The six retirement paths include:

1. Early Retirees -- 29% of workers retired in their 50s and did not work again, owing to adequate retirement savings.  This path is associated with defined benefit pensions, a defined contribution lump sum, high savings or strong savings patterns.
2. Work and Play -- 12% of respondents retired in their 50s, but quickly began working part-time or became self-employed.  Generally this group had adequate retirement savings, but made the choice to go back to work.  This path is more likely for people with defined benefit pensions or a defined contribution lump sum.
3. Still Working -- 35% of respondents left full-time work in their 60s, but continued working at some type of self-employment or part-time work into retirement for financial reasons.  This group in general has a lower level of financial resources than the previous two groups, including a lack of DB or DC plan.  Divorce and widowhood also increased the likelihood of being on this path.
4. Returnees -- 5% of workers retired early but returned to work for financial and/or psychological reasons.  These workers are more likely to be male with a DB plan, but with poor spending habits.  Divorce and widowhood also increased the likelihood of being on this path.
5. Spouse’s Retirement -- 9% of respondents gradually cut back on full-time work in their 40’s and 50’s and tied their retirement to that of their spouses.  Individuals in this group are more likely to be female, married and in excellent health.
6. Never Retire -- 10% of workers continue to work through their 60s and say they never plan to retire.  This group is generally characterized by an ongoing interest in work and is not distinct in terms of financial, health or other demographic factors.

The Vanguard study included a survey of 2,474 respondents age 40 to 69.
 
To read the complete Vanguard Study, please click here.