In spite of the massive stock market rally starting March of 2009, worries over retirement are up sharply from 2002. Please consider In U.S., 53% Worry About Having Enough Money in Retirement

A majority of nonretired Americans do not think they will have enough money to live comfortably in retirement, up sharply from about a third who felt this way in 2002. Nonretired Americans now project that they will retire at age 66, up from age 60 in 1995.

Younger Americans Most Positive

Younger Americans are the most optimistic about having enough money to live comfortably when they retire. They are also the least likely to say they will rely on Social Security as a source of income when they retire. This suggests that young Americans are looking optimistically toward other sources of income in retirement.

Nonretired Adults Now Project a Retirement Age of 66

Nonretired Americans now project a higher retirement age than in previous years. When Gallup first asked nonretired adults in 1995 when they expected to retire, 12% said they would retire after age 65. That percentage is now up to 37%. The percentage saying they will retire before age 65 is down from 47% in 1995 to 28% today.

Implications of Boomer Retirement Plans

Note the deflationary aspect of the survey results. Those who fear not having enough money for retirement have a strong incentive to spend less and save more.

Also note the number who expected to retire after age 65 has risen from 12% in 1996 to 37% today. In isolation, this would put upward pressure on the participation-rate and therefore unemployment. However, boomer demographics are such that it will take a decreasing number of jobs to hold unemployment constant.

In 2000 it took about 150,000 jobs a month to hold unemployment steady. Currently Bernanke expects it takes 125,000 jobs a month to hold the unemployment rate steady.

I expect that by 2015 it will only take 90,000 to 100,000 jobs a month to hold the unemployment rate constant.

However, there are millions of individuals who want a job and do not have a job but the BLS does not count as unemployed because they stopped looking for a job. Should those workers start looking for jobs, this too would put upward pressure on the participation rate and unemployment rate.

Mike “Mish” Shedlock
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