Americans who say they expect to “never retire” are more likely to have lower financial knowledge, according to a study from Ohio State University. The national survey revealed that 20% of those who missed all three financial knowledge questions anticipated never retiring, compared to just 12% of those who answered all questions correctly.
The study also found that people overconfident about their financial knowledge—and those whose lack of confidence matched their low knowledge—were more likely to say they would never retire. Researchers suggest that many people claiming they will never retire aren’t doing so out of love for their jobs, but rather because they may not fully understand their financial situation or haven’t adequately prepared for retirement.
“If you’re not knowledgeable about finances, it suggests you don’t know what your financial situation is, and you may have no idea when you can retire,” the researchers explained. They added that some people’s declaration that they will never retire could be an admission of their failure to prepare for it.
Reshaping preparedness
These findings could reshape how experts evaluate retirement preparedness in America. Many analyses assume that those planning never to retire will end up retiring around age 70, but previous research indicates that many of these workers may leave the workforce much earlier—potentially before they’ve secured their financial futures.
This means current projections of workers being on track for an adequate retirement might be too optimistic, as those saying they will never retire may not be working toward a financially successful retirement.
The study used data from the 2016 and 2019 Surveys of Consumer Confidence, which included 4,607 households with heads of household aged 35 to 60 working full time. The financial knowledge questions, known as the “Big Three,” covered compound interest, real rates of return, and risk diversification.
Less knowledge
The more questions respondents got wrong, the more likely they were to say they expected never to retire. Additionally, 30% of those who rated their financial knowledge as very low (0 to 2 on a 0-10 scale) expected never to retire, more than double the 14% of those who considered themselves highly knowledgeable (9 or 10 on the scale).
Results also showed that 17% of those overconfident in their financial knowledge anticipated never retiring, higher than the 12% of those whose confidence matched their actual financial understanding.
The study’s findings highlight the need for financial planners, counselors, and educators to better understand what it means when individuals say they expect never to retire. The researchers conclude that it’s important to ensure these individuals have the necessary financial knowledge and confidence to effectively plan for life after work.
