Research

Navigating the uncertainties of modern retirement patterns

Investment planning strategies for incorporating changing trends in retirement age and longevity.

By: Susan Ye
Updated: 1/23/2025
Key Takeaways
  • Our analysis shows retirement age and longevity have both increased over the past 25 years and retirement age is likely to continue rising over the next few decades.
  • The uncertainty surrounding retirement age and life expectancy is growing, and people on average struggle to accurately estimate these inputs. Retirement is no longer a simple on-and-off switch; it has become more dynamic. Based on our impact analysis using empirical data, the uncertainty of retirement and lifespan leads to a reduction in the sustainable retirement spending level. Therefore to better prepare, investors, sponsors, investment managers, and advisors, may want to consider a random variable approach based on empirical data rather than sticking to a fixed value or a scenario analysis.
  • There is an inverse relationship between retirement age and retirement duration—people who retire earlier have a longer retirement duration, while those who retire later have a shorter retirement duration. There is greater risk of insufficient savings to support sustainable lifetime income for people who retire early.
  • Demographic, economic, and policy factors as well as employment sectors all impact retirement age. Our factor analysis can help forecast future retirement trends, providing valuable insights for planning and policy development, in our view.
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