Why Do Americans Retire?

June 13th, 2018 by 

In our average retirement age in the United States piece we briefly discussed retiring for health reasons... then didn't dive deeper. Through the lens of 2017 Survey of Household Economics and Decisionmaking responses, today we'll evaluate retirement reasons for the living retiree population. We'll touch both why do Americans retire as well as craft a definition for voluntary versus involuntary retirement.

Why Do Americans Retire?

The 2017 SHED asked a nice combination of retirement reason questions, nicely split between voluntary and involuntary. It also asked respondents to rate how important each reason was between 'Very' and 'Not at all'. We only count respondents here who answered the prompt (refused or not asked are omitted).

 Not ImportantSomewhat ImportantVery Important
Poor Health61.84%14.39%23.77%
Wanted to Do Other Things41.42%32.17%26.41%
Didn't Like the Work70.41%19.49%10.10%
Family Responsibilities64.22%19.34%16.45%
Wanted More Family Time44.12%28.02%27.86%
Forced or Lack of Work73.53%10.51%15.96%

As you can see, 'Wanted more family time' counted the highest number of current retirees ranking it 'very' – a full 38.6% of retirees. With 'Somewhat Important's included, 58.58% of retirees responded with 'Wanted to Do Different Things'. Using that measure, 'Wanted More Family Time' also did well at 55.88%.

Why do Americans retire reasons
Americans ranking somewhat or very important for retirement reasons

On the negative side (and combining somewhat and very), 'Poor Health' was the most common involuntary reason retirees gave on the survey. A full 38.16% of retirees fit that mold, followed by 35.78% 'Family Responsibilities'.

Involuntary vs. Voluntary Retirement

The survey split its 6 split involuntary and voluntary reasons for retirement evenly. It also lets us divide the population into men and women to see if involuntary or voluntary retirement dominated in either sex.

We ranked 'Poor Health', 'Family Responsibilities', and 'Forced to Retire or Lack of Work' as involuntary reasons. For retirees ranking those, apparently retirement wasn't fully a choice in their hands. Conversely, 'Wanted to Do Other Things', 'Didn't Like the Work', and 'Wanted More Family Time' we classified as voluntary. These reasons make it clear that a retiree wanted to retire... at least at some level.

We split up respondents into only voluntary and involuntary using 'Very Important' responses to the prompts. A retiree counts as involuntary if they only have a 'very' for an involuntary reason. The same logic applies to voluntary - only if 'very' showed up on the voluntary side and not the other.

Because of the methodology, the best way to read the table is 'mostly voluntary' vs. 'mostly involuntary'.

 All RetireesMenWomen

Luckily, voluntary retirees were the norm. There wasn't much gender disparity, either - for men and women, voluntary responses dominated retirement reasons.

Still, the difference wasn't overwhelming, and although we received a strong signal from some retirees we aren't able to categorize everyone. A full 46.27% of retirees either refused to state, were mixed between voluntary and involuntary, or ranked no reasons 'very important'.

Conclusions on Retirement Reasons in America

It's hard to state whether the numbers are surprising... or even to make a normative judgement good vs. bad. When we took you through our retirement savings math, you'd be forgiven for thinking we'd see different results from this data. Once again – and as we've discussed recently – much of the perceived gap in savings versus successful retirement is credit to Social Security. (We'll look next at funding sources in retirement.)

As for the numbers in isolation? Of  ~49.3 million retirees in the United States,  3/4 of them weren't (only) dragged into retirement involuntarily. Still, that leaves a full 25.01% of retirees who would have kept working if not for various circumstances.



PK started DQYDJ in 2009 to research and discuss finance and investing and help answer financial questions. He's expanded DQYDJ to build visualizations, calculators, and interactive tools.

PK lives in New Hampshire with his wife, kids, and dog.

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