“Experience is the best teacher,” says an old Romanian proverb, “But only a fool learns by no other.”
With that in mind, today’s crop of retirees – those older 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 recent survey by the Transamerica Center for Retirement Studies, some aspects of the reality of retirement don’t quite match with expectations. If they could go back in time to their youth, knowing what they know now about their retirement years, what would they tell themselves? What would they tell you, even now, as you prepare for your own retirement?
Well, thanks to Transamerica’s researchers, we now have a pretty good idea.
- Retirement May Come Early
First, don’t count on being able to retire on your planned timeline. The strong majority of those current retirees surveyed reported that they retired sooner than expected – and only 16 percent reported that they had saved enough by that time.
For example, most retirees reported that they didn’t get to choose the date they left the work force. Six in ten reported that retirement came sooner than they had planned. But only 16 percent of them reported that they were 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.
Only 1 retiree in 100 waited until age 70 to be eligible to receive their full maximum monthly retirement income. Most had to take benefits starting at age 62 – and receive much less income as a result.
- Save More.
The vast majority of current retirees surveyed reported that they didn’t save enough while they were working. 61 percent of current retirees report that Social Security is their primary source of income. Furthermore, only 16 percent of those who are currently retired report that they had built enough savings to have a secure and successful retirement.
76 percent of retirees wish they had saved more on a consistent basis.
- Get Professional Advice.
Most retirees – 53 percent, would have liked to have received more information and advice from their employers, while 68 percent wish they knew more about investing and retirement saving.
41 percent report 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 their 70s, Americans have to make a series of very important decisions about whether and how to tap their retirement accounts, when and how to take Social Security benefits, whether to enroll in Medicare Parts B, C, D or in Medigap insurance and the like. 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.
- Plan on Being Retired for Decades.
On average, retirees report themselves to be in good health, and expect to live a median average of 28 years into retirement. 41 percent expect to live for 30 years or longer. Many of them plan to live to age 90. Plan accordingly.
- Stay Married.
When it comes to retirement income, the “marriage dividend” is huge. Married retirees report a median retirement income of $48,000 per year, while unmarried retirees report a median income of $19,000.
- Get out of debt.
42 percent of retirees report that their financial priority is just getting by on their newly limited incomes, while paying health care expenses is a priority for 37 percent of them. But 25 percent of them say they are prioritizing trying to get out of credit card debt, and another 21 percent report they are prioritizing paying off their mortgages. The combination is going to crimp anyone’s lifestyle on a limited retirement income.
- Start planning now.
Nearly half of respondents – 48 percent – report wishing they had started thinking about retirement earlier. Nobody reported they were glad they didn’t consider retirement until the last minute.
“People are living longer than at any time in history, yet the age at which we stop working has remained relatively unchanged,” said Catherine Collinson, president of the Transamerica Center for Retirement Studies. “Mathematically, the notion that people can work for 40 years to save enough and accrue sufficient benefits to fund a 30-year retirement does not add up. Solving this equation requires changes in how we think about aging, employment, and retirement itself. It also requires the highly coordinated efforts of employers, policymakers, nonprofits, the private sector, and individuals and families.”