Some of the nation’s largest insurance companies have gotten into the retirement research arena in a big way. Among the firms coming out regularly with research reports about aging and retirement are familiar names like MetLife and long-term care firm Genworth. Recently we found this comprehensive study, the first of its kind from the insurance giant Transamerica.
Before you click on the link and download the report, titled “The Current State of Retirement: a Compendium of Findings about American Retirees,” you should know that it’s long – a total of well over 100 pages. What caught our eye in this study, published only a few months ago, was summarized in the introduction, which cited ten important facts about today’s retirees. We’ll highlight a few of those observations here, but in short the picture is one of upbeat optimism masking a surprising lack of adequate preparation.
(An interesting side note: this study included interviews with more than 2,000 participants in the U.S., all age 50+ and all either fully retired or semi-retired. The study took place in 2015, some years after the official end of the Great Recession. Yet in spite of the time that had passed, the after-effects of that financial shock still lingered: about a third of respondents said they had “somewhat” recovered from the recession but about one in 12 said they had not yet begun to recover financially and emotionally – and a shocking one in eight reported they felt they may never recover. The tragic effects of Wall Street greed are reverberating still.)
What did the Transamerica study show about today’s retirees? First, when it comes to financial priorities, their list is quite basic. Most cited covering daily living expenses, paying medical bills and paying off the mortgage as the top three demands on their retirement income. Sadly, in a finding Transamerica calls “alarming,” fully one-quarter say they are still paying off credit card debt. As we counsel our clients and radio listeners, the burden of debt increases exponentially as you get older, and any debt must be approached with extreme caution and good counsel.
A second finding should come as no surprise – almost all (about 90%) of respondents say Social Security is their most important income source. Everything else – savings, investments, retirement accounts) is much farther down the income ladder. Interestingly the average income in the study was relatively modest, with a huge gap between income for married couples ($48,000 average) and single adults ($19,000 average). We were surprised to read that only a tiny fraction of respondents had delayed Social Security until age 70, the age when monthly benefits reach their maximum for this age group. Most started benefits at 62.
Reading farther in the survey, it’s in the savings and planning areas where we see a disconnect. Almost three-fourths of retirees express confidence that they will be able to maintain their lifestyle as they age, yet fewer than half claim to have a big enough nest egg to accomplish that goal. Combine a fairly paltry savings performance (the median retirement account savings is estimated at $119,000 but singles report far less, about $40,000) with the fact that a significant majority of people retire sooner than they expect to, and there does seem to be an alarming lack of willingness to look more honestly at retirement needs and expectations.
Here’s one more statistic we found startling, but not shocking. More than half of the Transamerica survey respondents say they have a financial strategy to guide them in retirement. But do you want to hazard a guess how many of them have their plan in writing? About one in ten does. What’s more, even those who say they have a plan are failing to take into account some of retirement’s very real expenses, including inflation, long term care insurance, tax planning and so on. Retirees ignore these hidden costs at their peril.
Here at AgingOptions we see evidence all the time of this lack of adequate planning for retirement. Without a solid plan, your assets will be at risk, and you will be far more likely to become a burden to your loved ones. It doesn’t have to be that way! That’s why it’s our passion to persuade our clients and radio listeners to put together a plan, called a LifePlan, that encompasses all aspects of your retirement security: from legal affairs to housing choices, from financial security to family relationships, and always making certain you have the medical coverage to meet your needs as you age. We stand ready to be your guide in building a LifePlan customized for your individual priorities and circumstances.
To learn more, why not plan now to attend a LifePlanning Seminar in your area? These information-packed seminars are free, and there’s no obligation whatsoever. Come with all your retirement questions, and be prepared for a refreshing new approach to the challenges of retirement planning. Register now for the seminar of your choice on the Upcoming Events tab on our website. We’ll look forward to meeting you soon.
(originally reported at www.transamericacenter.org)