Today’s crop of retirees, the mature citizens who are now actually living through retirement, and in some cases paying the price of poor decision-making earlier in life, have a lot of wisdom to pass on to the rest of us!
According to a survey by the Transamerica Center for Retirement Studies, some aspects of the reality of retirement don’t quite match expectations.
If they could go back in time to their youth, knowing what they know now about their retirement years, what would these retirees tell themselves? What would they tell you, even now, as you prepare for your own retirement?
Thanks to Transamerica’s researchers, we now have a pretty good idea.
1. Retirement May Come Early!
First, don’t count on being able to retire on your planned timeline. The majority of the current retirees surveyed reported that they retired sooner than expected and only 16% said they had saved enough by that time.
For example, most retirees reported that they didn’t get to choose the date they left the workforce. Six in 10 reported that retirement came sooner than they had planned. Only 16% of them said they had been ready to retire.
The rest were forced into retirement by poor health, the need to care for an ailing family member, layoffs or other structural changes, or just sheer unhappiness with their employment and career situations.
You need to have a Backup Plan in case any of the above happens to you!
Another Transamerica study found that 37% of workers have a backup plan for retirement income if they are unable to work before their planned retirement. If you don’t have a plan, we can help you structure one.
2. Save More!
Almost half of retirees (47%) reported that they hadn’t saved enough while they were working. Most respondents (69%) cited Social Security as their primary source of income.
Just 18% cited retirement accounts and personal savings, including a 401(k) or similar accounts/IRAs (7%), and other savings and investments (11%) as their primary income source. One in 10 retirees reported a company-funded pension plan as their primary source.
Furthermore, only 16% of retirees reported that they had built enough savings to have a secure and successful retirement, and 76% wished they had saved more on a consistent basis.
3. Get Professional Advice!
About half of the survey respondents, 53%, would have liked to have received more information and advice from their employers, while 68% wished they had known more about investing and retirement saving.
Only 31% of retirees said they should have relied more on outside experts to monitor and manage their retirement savings.
Getting professional advice is especially important because beginning at about age 55 and lasting through your 70s, you will likely have to make a series of important decisions, including:
Some of these decisions have far-reaching and even permanent consequences. Having professional advice in your corner is critical to making sound and timely decisions.
4. Plan on Being Retired for Decades!
On average, retirees reported themselves to be in good health, expecting to live a median average of 28 years into retirement.
Four in 10 expected to live for another 30 years or longer. Many of them were planning to live to 90. Plan accordingly.
Many persons who live long, run into an issue of dwindling cash in their retirement accounts, forcing them to make difficult decisions later in life, when they will likely need their funds more than ever before. The biggest fear of retirees is the fear of running out of money!!! This is where annuities and life insurance cash values can be critically important as they can be converted into a “Guaranteed Income for Life!”
5. Get out of debt!
One in four retirees reported prioritizing trying to get out of credit card debt, and another 21% were prioritizing paying off their mortgages. The combination is going to crimp anyone’s lifestyle on a limited retirement income.
If you have racked up debts over your lifetime, you should consider crafting a plan for how you pay it off before you reach retirement! The last thing you want is to struggle financially because of these high-interest debts that eat into your income.
6. Start planning now!
Nearly half of respondents reported wishing they had started thinking about retirement earlier. Nobody said they were glad they hadn’t considered retirement until the last minute.
It is important to either start or continue putting money aside for the future. A strategy to consider is to increase, by 1% each year, how much money you put away for yourself.