Retirees come in all shapes, sizes, colors, and income levels; however, they share many of the same financial concerns.
Frequently, the reality of retirement varies greatly from their expectations, and more than a few of these seniors are fretting over their long-term expenses.
“The Current State of Retirement: A Compendium of Findings About American Retirees,” a recent survey by Transamerica Center for Retirement Studies, reveals several interesting facts about the financial status of the country’s retirees.
Below are nine selected pieces of information.
1: Retirees Live on a Modest Income
According to the survey, the median annual income of retired households is $32,000. This number varies greatly depending on the marital status of these seniors. Single retirees have a median annual income of $19,000, while the median annual amount for married retirees is considerably more: $48,000.
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2: Retirees Say Covering Basic Living Expenses Is a Priority
Simply making ends meet or covering basic living expenses is a financial priority among 42 percent of respondents. Meanwhile, 37 percent say that paying for their healthcare expenses is a financial priority. The majority of retirees say that their standard of living has not changed; however, anywhere from 20 percent to 29 percent (depending on the age group) report that it has decreased.
3: Retirees Depend on Social Security
Social security is not “supplemental” for most retirees it’s their primary source of income. When asked to list their sources of income, 89 percent cited Social Security, compared to less than half of retirees who also had other sources of income. Only 48 percent listed savings and investments; 42 percent had a company-funded pension plan, and 37 percent had a 401(k)/403(b)/IRA.
4: Retirees Start Receiving Social Security Sooner Than Planned
The median age at which retirees elect to start receiving Social Security is 62 years old, even though their monthly benefit amount is greatly reduced when they start this early. At the age of 70, retirees receive the maximum monthly benefit amount. However, only one percent waited until then to start collecting Social Security.
5: Retirees Leave the Workforce Sooner Than Planned
One reason retirees start their Social Security benefits earlier is that they’re leaving the workforce earlier than they anticipated. While 60 percent stated that they retired sooner than they planned, a very small percentage, 12 percent, left because they saved enough money (or had funds from another source) to retire and live comfortably. And less than 10 percent retired later than they planned.
The reasons for retiring earlier vary by age group. For example, 70 percent of those who retired at age 70 or older were likely to say that they left the workforce for employment-related factors. On the other hand, more than half, 52 percent, of those who left while they were in their 50s cited health reasons.
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6: Retirees Are in Good Health and Expect to Live a Long Time
The majority of retirees, 70 percent, rate their health as good or excellent and the average senior expects to live 28 years in retirement. However, it’s a different story among younger retirees (those in their 50s). Slightly more than half, 55 percent, of retirees in this age group would rate their health as excellent or even good, and 45 percent of retirees in their 50s rate their health as poor or fair.
7: Retirees are Happy and Active
Overwhelmingly, retirees are enjoying themselves. A whopping 94 percent say they are happy, and 90 percent report that they’re enjoying life. More than half of retirees, 53 percent, enjoy spending time with their families, while 40 percent are pursuing hobbies, and 31 percent are traveling.
However, when asked what they dreamed they would be doing during retirement, 64 percent thought they would be traveling, which is less than half of the seniors who are actually enjoying this retirement dream. Also, 31 percent of retirees say it’s difficult for them to perform even routine activities.
8: Retirees Rate Their Fears Based on Age and Stage of Life
The two biggest fears of many retirees (both 44 percent) are that their health will decline and they will need long-term care, or Social Security will be reduced or completely eliminated. Seniors in the 60+ age group are more likely to fear declining health and long-term care.
However, a higher percentage of those between the ages of 50 to 59 are more likely than retirees in other groups to fear being alone and isolated, or that they’re not filling their days with quality activities.
9: Retirees Usually Don’t Have Financial Dependents
Most retirees (63 percent) don’t have another person who depends on them financially. Among those who do, 31 percent named their spouse or partner as the financial dependent. Just six percent stated that they had a dependent adult child over the age of 25, compared to three percent who had a dependent adult child under the age of 25, and two percent who had an adult grandchild under the age of 25.
Like most Americans, retirees are cautiously optimistic about the future. While most of them appear to enjoy the new lifestyle, they're not exactly living out their retirement dreams.