Survey: Vanguard Research Shows Continued Work Figures Large in Retirement Planning

The Vanguard Group's The Vanguard Center for Retirement Research has published "Six Paths to Retirement", which highlights the importance of financial preparation and saving in determining the transition from work to retirement: While those with the financial resources look forward to possible paths with a flexible work arrangement or no work at all, for those who are short on retirement savings, work in some form will play an important role in helping close the savings gap.

The report is based on both a quantitative survey of some 2,500 adults age 40 to 69 and on in depth interviews with 38 men and women, age
40 to 75. From the larger survey, Vanguard reports 6 in 10 Americans say that their retirement plans include part-time or full-time work, with "downshifting" being a common strategy for making the transition from work to retirement--that is, older workers shift to less stressful or simpler jobs before stopping work entirely. From both parts of the research, Vanguard identified six paths to retirement among Americans 55 and older:

• Early retirees: 29% retired early. In most cases, this group had pensions and high savings balances.
• Work and play: 12% left full-time work in their 50s, but immediately set up their own companies or took on high-level, part-time jobs. They largely enjoy their work and want to stay active.
• Still Working: 35% of workers moved to part-time or self-employment in their 60s. They tend to have lower financial resources, and often lack a pension.
• Returnees: 5% stop working, typically in their 50s, and then are forced to return to the work force, sometimes because of a financial shock like the death of a spouse.
• Spouse's retirement: 9%. Often married women in excellent health, they follow their husband into retirement in their 40s and 50s.
• Never retire: 10%. The majority say they do it to meet basic living expenses.

Source: News Release The Vanguard Center for Retirement Research (January 17, 2007); Associated Press "Retirees Work for Fun or Necessity" (January 18, 2007)