The Recession, Debt, & the Work Environment: Impacts on Retirement

Retirement planning is influenced by a wide range of individual and social factors. Personal preferences, cultural expectations, large-scale economic climates, and household debt and assets all influence an individual’s decision making about retirement. The economic downturn that began in 2008 caused significant losses of wealth to individuals nearing retirement, and led to many layoffs and unplanned early retirements. A recent study expands on existing research on the influence of the recession by using data from the 2006 and 2008 waves of the Health and Retirement Study (HRS) to explore how individual life trajectories, workplace and other institutional policies, and social norms affect individual retirement expectations in the context of the downturn.

The HRS is a nationally representative longitudinal study on aging that includes individuals age 50 and better. The researchers examined a subsample of the larger study, consisting of 2,732 respondents between the ages of 50 and 64 who were in the labor force when interviewed for the 2006 and 2008 HRS waves. A wide range of personal financial, health, demographic, and labor data was collected about the respondents, who were also asked to assess the probability that they would be working past the age of 62 or 65.

For the study, the authors assessed various hypotheses about the influence of the stock market, unemployment rates, personal income and wealth, individual outlook on the economy, proximity to expected retirement (whether or not respondents planned to retire in the near future), and expectations of longevity (how long respondents expected to live during retirement) on retirement expectations.

In terms of wider economic factors, the researchers found that increases in unemployment rates led older workers who expect to work past the age of 62 to delay retirement. Those with either a high level or a low level of education were particularly more likely to expect to work past 65 than those with an average level of education. There were no significant effects on retirement expectations based on changes in the stock market. As expected, however, changes in personal wealth and debts had significant influence on retirement expectations. High levels of debt were associated with expectations of delayed retirement.

Personal beliefs and experiences of the economy, life expectancy, and the workplace were all associated with retirement expectations. Individuals with a pessimistic view of the economy expected to delay their retirement, while individuals who reported a high mortality risk expected to retire relatively early in anticipation of a short retirement period. Individuals who felt that younger workers were favored in the workplace expected to retire early, as did employees with defined pension plans.

While many of these findings were expected, the study provided policy and empirical insight into how social-level economic factors, local workplace conditions, and personal attributes collectively influence retirement planning. The authors suggest that the influence of investment portfolios, in contrast with other aspects of individual financial situations, may be overestimated by observers and financial analysts, and that consumer indebtedness should be considered a particularly important factor in developing workforce retirement projections.


Szinovacz ME, Martin L, Davey A. Recession and expected retirement age: another look at the evidence. The Gerontologist. (2013). DOI: 10.1093/geront/gnt010


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