New paper from CRR: “Workers’ Response to the Market Crash: Work More, Save More?”

The Center for Retirement Research at Boston College has released a new Issue in Brief by Steven A. Sass, Courtney Monk, and Kelly Haverstick titled "Workers' Response to the Market Crash: Work More, Save More?"

In the summer of 2009, the CRR surveyed individuals age 45-59 on how the market crash has affected their retirement planning. Key findings from our analysis are:

• In response to the crisis, over 40 percent expected to work longer/save more.
  
• Those who were highly distressed were more likely to act.
  
• After receiving "reliable" financial advice, the majority of initial "no changers" decided to work longer/save more.
  

The brief is available here.

My comment: one thought about the findings, which I obviously haven't yet reviewed carefully. The survey found many individuals reporting that they will work longer in response to the market crash, yet we also see reports that filings for Social Security retirement benefits have shot up. Contradictory? Maybe, but possibly not. My guess is that recent events may have affected different people in different ways. High income people get most of their retirement income from their own pensions, which were hit hard by the market downturn. To make up for these losses, these folks will tend to work a little longer. Low-income people, by contrast, suffered little from the market downturn since most of their retirement income will come from Social Security, but they are more likely to have been hurt by rising unemployment. So these folks may find themselves squeezed on the employment front and decide to retire earlier. So the same events may result in opposite reactions from different people.