What You Expect in Retirement vs What You Get: Where Reality Can Surprise You

When and how we each eventually retire can have significant implications on our financial situations during retirement.

Here, I’ll review three key gaps that exist when it comes to retirement expectations, primarily leveraging data from EBRI’s 2025 Retirement Confidence Survey (RCS):

• People tend to retire early (about three years, on average)
• Retirement tends to happen more suddenly than expected (more like a waterfall than a glide path)
• The actual odds of working during retirement are a lot lower than expected (75% expect to work, but only about 30% do so)

Collectively, these three gaps can have significant (negative) financial implications on retirement outcomes if they aren’t considered; therefore, it’s important for companies and financial planners to educate workers about these gaps to help them plan accordingly.

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Retiring early is the norm

One of the most important assumptions in a retirement plan is the age of retirement. A few extra years of work can do wonders in terms of closing any kind of savings gaps.

Working longer gives someone an extra year to save, an extra year for those savings to grow, one less year of retirement income to fund and one additional year to delay claiming Social Security. I’ve often described delayed retirement as the “silver bullet” when it comes to improving retirement outcomes.

Unfortunately, there has been a relatively persistent gap between actual and expected retirement ages for the past 30-plus years, where people tend to retire earlier than expected (on average).

For example, historically about 50% of retirees retire on time, about 45% retire earlier than expected, and about 5% retire later than expected.

The median expected retirement age is 65, which has drifted slightly upward over time, but the median actual retirement age is closer to 62.

We can see the evolution of actual and expected retirement ages leveraging data from Gallup, an effect that is very consistent with some research I’ve worked on leveraging data from the Health and Retirement Study.

While there was a noticeable bump in retirement timing differences in the latest RCS, where only 40% noted retiring earlier in the 2025 RCS, vs 49% in the 2024 version, it’s too early to say if this is part of a new trend or a relatively temporary effect.

The gap clearly persists, though, where most people retire before they expect to do so (or on time), while relatively few (only 6%) retire later than expected.

It’s important to note that many of the reasons people retire early are not related to choice.

For example, based on the 2025 RCS, while 44% of retirees note retiring early because they could afford to do so, 66% of the reasons cited were out of the respondent’s control (each respondent could select multiple options), such as company downsizing or health issues.

In other words, retiring early for many (or most) of those who have to do so is less of a choice than something that just happens (that can’t easily be prepared for).

Retirement is more like a waterfall than a glide path

Most people expect a smooth transition into retirement.

For example, 50% of workers expect a gradual transition or reduction of hours leading to a full-time stop in retirement (or glide path).

In reality, though, 73% of retirees report a full-time stop, while only 19% report more of a glide path. These findings suggest retirement could be a lot more abrupt than most workers are expecting today.

While part of this effect is likely related to the involuntary situations prompting when people retire (i.e., they retire early), experiencing an abrupt retirement may leave the individual with fewer options should they want (or need) to continue working.

Working in retirement: Not so much a thing

While it’s true that labor force participation rates have been on the rise among older Americans over the last few decades, the actual percentage of working retirees is significantly lower than those who expected to do so.

We can see this effect by looking at data from the RCS, which asks current workers if they think they will work for pay after they retire and if they have worked for pay since they retired. The distribution of responses is included below.

We can see that while 75% of workers expect to work for pay in retirement, only about 30% have done so, primarily on a part-time (17%) or a seasonal/sporadic (7%) basis. Only 2% of retirees report working full time in retirement.

Among those who note working for pay, the number one cited reason was wanting to stay active and involved (89% of respondents), followed by enjoying working (88% of respondents).

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Only 40% of those working report doing so to make ends meet, although 73% report working for pay to make money to buy extra things.

Helping investors expect the expected

A retirement income plan is only as good as its assumptions. There are notable, persistent gaps that exist between worker expectations and the outcomes experienced by retirees that need to be incorporated into any kind of retirement income projection, especially since most of the gaps could negatively affect the retirement outcome of workers.

Educating workers on these points and helping set reasonable expectations is key.

For example, a client may say they plan on working until age 67, but educating them about the likelihood of early retirement and using age 65 in financial planning is probably a more reasonable assumption.

Additionally, a client may be confident he or she will work in retirement to supplement any kind of savings shortfall, but this is a lot less likely to happen in reality.

Therefore, understanding what’s actually expected in retirement can help clients prepare for what they might not expect.

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