A recent comparison of adults age 60 and older across 14 developed countries shows that over 40% of US adults between the ages of 60 and 64, 20% of adults between the ages of 65 and 69, and 5% of adults age 70 and older are still in the workforce. The United States has twice as many working adults between the ages of 65 and 69 as do Denmark and the United Kingdom, and the highest proportion of adults age 70 and older. The report is from the University of Michigan's Health and Retirement Study, the English Longitudinal Study of Aging, and the Survey of Health, Aging, and Retirement in Europe. Except wealthy households, the majority of US households reaching retirement age have limited choices: Continue to work for as long as physically possible, or exit the workplace and live a financially constrained existence dependent on Social Security, Medicare, Medicaid, and inadequate retirement assets. This Segment Summary focuses on households with a working household head age 65 and older (retirement-age working households) and early-retired households with a head younger than age 65.

Demographics

Mature, working households and early-retired households are very different. Overall, retirement-age working household heads have more education and higher incomes than do early-retired household heads. They are also more likely than average—and more than three times as likely as early-retired households—to own a business or professional practice (16% net), twice as likely to be a veteran of the US military, and significantly more likely than average (67%) to own their own home. Both household groups are "bipolar": They tend to skew to the extremes.

• The mean age of working household heads (HHHs) age 65+ is 70; of early-retired heads, 59. Almost two in five working heads are Revolving Retired.
• Almost two-thirds of working heads have an annual household income (HHI) of $50K or less; 27% have an annual HHI of $100K or more. Median HHI is $53K.
• Roughly two-thirds of early-retired heads have an annual HHI of $30K or less. Median HHI is $38K.
• Almost two-thirds of working HHHs have some college or a college degree.
• Almost half of early-retired heads have a high-school diploma or less; 23% have some college.
• Two-thirds of working heads are married; 14% are widowed.
• Almost half of early-retired heads are divorced or separated. Of early-retired households, 70% are single-headed households; 56% are women-headed households. Almost one-quarter of early-retired heads are unable to work.
• One in ten working heads have dependent children; almost 20% have children who have returned home.
• Early-retired households are more likely than average to have children who have returned home and are almost three times as likely as all households to support dependent adults—one-third do so.
• One-third of working heads are Older Boomers; two-thirds are members of the Silent Generation. Of early-retired HHHs, 58% are Older Boomers.

Financials

The data indicate that some portion of early-retired households retired successfully; the majority have not—slightly more than half are struggling to make ends meet. Conversely, some portion of working household heads could retire successfully, but chose not to for reasons such as their desire to remain productive, their assets are insufficient to maintain their desired lifestyle, or they are reserving their assets for possible medical needs; 25% are financially secure or have more than they need.

• Working households have almost three times as much in savings as do early-retired households; they have twice as much in investable and total assets. However, working households have liabilities 2.5 times higher ($91K) than do early-retired households ($35.8K).
• Both early-retired and working households are below average (41%) for first-mortgage loans (27%, in comparison with 32%, respectively).
• Early-retired households (32%) are less likely than average (46%) to have an outstanding credit-card balance.
• Although only 4% of all households have an asset- or investment-management account, early-retired households (9%) are more than twice as likely to do so; only 20% have a stockbrokerage account, in comparison with 31% of working households.
• Of households that own investment accounts, 42% of early-retired and 45% of working households' total balance is less than $100K. Mean amounts (including $0), however, are similar: $656K for early-retired households and $689K for working households.
• In addition to savings and investments made directly by the household, working households are twice as likely as early-retired households to be fully vested in a defined benefit plan (46% versus 23%) and to be a veteran of the US military (38% versus 17%) potentially eligible for disability benefits if necessary.

Financial Attitudes and Tidbits

Both early-retired and retirement-age working households are risk averse because they have little to save and invest, because the past decade's market volatility has soured investing, or because they are protecting accumulated assets. Almost three-quarters of both household groups are relying on Social Security for retirement income—or will do so.

• The majority of early-retired households are risk averse (75% agree that the stock market is too risky) and are uncomfortable doing financial business on the internet (76%); 38% have no savings or investment goals.
• Four in five retirement-age working HHHs prefer to do most of their financial business in person; 30% consider themselves to be sophisticated investors. Only households with high assets are willing to take substantial risk (13%).

Implications

The days of retirement's being a set age—before which we save and after which modest spending is necessary—are over. As more Older Boomers retire, changes in retirees' attitudes and behaviors will become more noticeable. For example, internet use for financial matters will increase, and the desire to conduct financial business in person will decline. The importance of finding tax-deferred and tax- exempt financial products will increase—especially if interest and dividends become taxable income. Soon-to-be-retired households, buffeted by the Great Recession, are more skeptical and less trustful of financial institutions and intermediaries than previously.

Most consumers and financial-service providers who serve them need to rethink retirement entirely:

• Pensions are no longer guaranteed; only 30% of households have a pension.
• Defined-contribution plans, the primary tool for accumulating retirement assets, do not provide a safe, smooth, and simple way to create income for life.
• Uncertainty exists about life expectancy and end-of-life health-care costs.
• Social Security's future solvency is questionable.
• Inflation, deflation, and stagflation are all possibilities.
• The ability to maintain a preretired lifestyle in retirement is in question.
• The number of transactions (spending) as households struggle to live on a fixed income will decrease.
• The desire for low-risk investments, and the need for assisted-living or in-home-care insurance (for households that can afford it) will increase.

During this time of significant social change, opportunities exist for institutions willing to learn, anticipate, and act on consumers' evolving financial needs.