Due to longer lifespans and the uncertain sustainability of Social Security and Medicare, younger generations may have a more difficult time achieving a comfortable and financially secure retirement than their parents did. However, none of this means that the expectations and experiences of current retirees cannot provide valuable lessons for those still in the workforce, and a new Transamerica study offers a compendium of such insights.
For example, more than half (56 percent) of the surveyed adults who are fully retired did so before the traditional age of 65, and the median respondent stopped working at age 63. Twelve percent of surveyed Americans instead waited until their 70s to retire, which enabled them to receive their maximum Social Security benefit, and 2 percent continued working until age 80 or older. Only 35 percent of respondents, though, said that they retired when they had initially planned to do so.
Among those who delayed retirement, three-quarters blamed financial obstacles such as a continued need for the income from their job, a lack of savings, a smaller-than-expected Social Security benefit, and general anxiety about their financial situation. As for those who stopped working sooner than intended, only 11 percent said that they were able to do so because of their strong financial standing, whereas significantly more respondents blamed a loss of employment and/or ill-health.
The report’s authors added that “retirees’ circumstances regarding when and how they retired … offer a cautionary tale for those currently in the workforce on the importance of maintaining good health, financial planning, and competitive job skills,” as well as the need for “contingency plans if forced into retirement sooner than expected.” The emphasis on planning is not surprising since 46 percent of surveyed retirees said that they still do not have an old-age financial strategy in place.
Among those with a plan, only 12 percent said it is written down. To some this may not seem important but numerous studies have demonstrated that having a strategy in writing can lead to significantly better retirement outcomes. Moreover, beginning one’s retirement preparations at an early age can help younger generations avoid some of the most common regrets of surveyed retirees, e.g. failing to save consistently and waiting too long to worry about investing for retirement.
Sources: Transamerica Center for Retirement Studies
Post author: Charles Couch