On the surface, life after work would seem to be pretty good in the U.S. right now. In a new survey of more than 2,000 retirees by the Transamerica Center for Retirement Studies, 86% of the respondents said they are enjoying life. Six in 10 are spending time with family and friends, approximately four in 10 are traveling and engaged in hobbies, and one in every five are doing volunteer work. Their median age is 71.
Along with those sunny results, however, the survey documented others that are more disturbing. Most of the survey respondents are living on limited annual household income, for example—a median of $32,000—and nearly half have less than $100,000 in savings. Twenty-eight percent of the survey respondents carry mortgage debt—the median amount among those who do is $52,000—and approximately 27% carry other types of debt.
Seventy-three percent of the survey respondents say they wish they had saved more on a consistent basis before retiring, and only 18% are “very” confident they will be able to maintain a comfortable lifestyle throughout retirement. Their most common financial priority is “just getting by,” cited by nearly four in 10 survey respondents. That’s followed by paying health care expenses (34%) and paying off credit card debt (29%). Two in three survey respondents say Social Security will be their primary source of income over the course of their retirement, yet only 4% waited until age 70 to start collecting Social Security benefits, which yields the largest possible monthly payout.
“There are some big things that are going well, but there are also some big red lights flashing,” says Catherine Collinson, CEO and president of the Transamerica Institute and executive director of the Aegon Center for Longevity and Retirement. In reviewing the survey findings at the SVIA’s 2019 Spring Seminar in April, Collinson said “many retirees are living on the fringe. They may be doing well now, but in all likelihood they will not be able to withstand a major financial shock,” such as the need for long-term care, or even, perhaps, periods of high inflation.
Collinson noted that at a median age of 71, many retirees in the survey could live another 10 to 20 years or more, and observed that the median savings amount of $75,000 is unlikely to go very far under that scenario.
While it’s not uncommon for people to plan to work a few extra years to save more for retirement or to postpone tapping their savings, Collinson noted that more than half the survey respondents—56%—had retired sooner than planned. Their reasons were varied, but more than half the group cited one or more employment-related reasons, such as losing their job due to organizational changes, becoming unhappy in their work, or receiving an incentive or buyout package. Health and family issues were the next most common reason, cited by 47% of respondents, including 28% whose own ill health was the issue.
After more than two decades working in the retirement industry, Collinson said one of the most striking survey findings for her was that employers, who have invested so much in helping their employees save for retirement, often have done nothing to help them transition into retirement. Two out of every three survey respondents said that when it came time for them to leave the workforce their employers did nothing to help them. The most common benefit provided was an offering of financial counseling, cited by 6% of the respondents, followed by seminars and education about transitioning into retirement, cited by 5%.
With baby boomers now starting to leave the workforce en masse, Collinson said she also was surprised that few employers are taking opportunities to preserve their institutional knowledge by providing them with alternatives to full retirement—accommodating flexible work schedules, say, or allowing employees to take positions that are less stressful or demanding.
While expanding retirement plan coverage has been a major policy initiative in the time she’s been working in the industry, Collinson said, 32% of the survey respondents said they retired with no employer-sponsored retirement benefits, indicating that much work remains to be done on that front.
Collinson allowed that there is some good work being done right now in Washington to improve retirement security, particularly in the form of legislative proposals that would make it easier for small employers to offer retirement plans. But she said more will need to be done, and argued that the retirement industry, including the stable value industry, needs to “keep this issue front and center as an area of focus.”
Collinson also said individuals need to be more conscientious about engaging in financial planning, including planning for their health care needs.