Why Do Individuals Retire When They Do…
… And What Does It Mean For Their Retirement Security?
Prudential Financial sponsored research by the University of Missouri to identify the key factors
that impact when individuals choose to retire. This research identified several factors that make
individuals more likely to retire in any given year, including strong equity markets performance,
the retirement status of a spouse, and participation in a DB plan.2 Some of these factors heighten
the retirement risks to which individuals are exposed.
For example, based on historical stock market data, retiring after periods of strong equity market performance increases the likelihood of experiencing negative equity returns just after retiring, which have a much more detrimental impact on an individual’s retirement security than negative returns experienced later in retirement. This article outlines the findings from the University of Missouri’s research, highlights the investment risks associated with individuals’ elective retirement decisions.