Why saying you’ll ‘never retire’ may be a warning sign

Americans who say they expect to “never retire” are more likely than others to score low on a measure of financial knowledge, a new study shows.

In a national survey, 20% of those who missed all three financial knowledge questions said they expected they would never retire, compared to 12% who answered all questions correctly, who said they’d likely work well past retirement age.

The study also found that those who were overconfident in their financial knowledge (and those whose low levels of confidence reflected their knowledge) were more likely to say they would never retire.

The findings, combined with other research, suggest that many people who say they will never retire aren’t saying that because they love their jobs and want to continue working indefinitely, said Sherman Hanna, co-author of the study and professor of consumer sciences at The Ohio State University.

“If you’re not knowledgeable about finances, it suggests that you don’t know what your financial situation is, and you may have no idea when you can retire,” Hanna said.

“Saying they’re never going to retire may be for some people a way of saying they have failed to prepare for retirement.”

The study was published recently in the journal Financial Services Review.

The findings have important implications for the way experts evaluate how many Americans are adequately prepared for retirement.

Many analyses of the projected retirement adequacy of American workers assume that those saying they will never retire will end up retiring at about age 70. But in a previous study, Hanna and his colleagues found that many of these “never retire” workers will actually drop out of the workforce at a much younger age—suggesting they might stop earning a steady income before they’ve done enough to shore up their finances.

“It means our projections of the proportion of workers on track for an adequate retirement might be too optimistic,” Hanna said. “Many of those who say they will never retire may not know enough about their finances and are not working toward a financially successful retirement.”

The researchers used data from the 2016 and 2019 Surveys of Consumer Confidence, sponsored by the U.S. Federal Reserve Board. Their final sample included 4,607 households in which the head of the household was aged 35 to 60 and was working full time.

The three questions in the SCF that measured financial knowledge—called the “Big Three” by researchers—relate to compound interest, real rates of return and risk diversification.

Findings in this study found that the more questions participants got wrong, the more likely they were to say they expected to never retire.

The survey also asked participants to rate their own financial knowledge on a scale from 0 (no knowledge) to 10 (high knowledge).

Of those who said they weren’t financially knowledgeable (levels 0, 1 or 2), 30% expected to never retire, more than twice the 14% of those who believed they were very knowledgeable (levels 9 and 10).

The researchers also rated the financial confidence of participants—and whether they were overconfident or underconfident—by comparing their subjective ratings of their financial knowledge with their actual scores on the financial knowledge questions.

Results showed that 17% of those who were overconfident in their financial knowledge expected to never retire, higher than the 12% who had appropriately high confidence in their financial knowledge.

The findings suggest that financial planners, counselors and educators need to have a clear understanding of what it means when people say they expect to never retire, Hanna said.

“We need to evaluate those who don’t expect to retire to ensure they have the appropriate level of financial knowledge and confidence to help them make plans for their post-working life,” he said.

Other co-authors of the study were Zezhong Zhang and Lei Xu, both doctoral students at Ohio State.