Those soon to be retired may find a recent survey helpful. The survey of 2,000 people retired within the past two to six years revealed that new retirees are a money-worried, cash-strapped group, and dependent on Social Security because they have inadequate retirement savings. Still, they find satisfaction with their new life. Let's look at some of the key findings.
Key stats and opinions of those surveyed
The studied retirees; had an average household retirement income of $49,000, but a median [half had more, half less] household income of only $34,000. The group is almost evenly split between those living better than in their working years and those living on less. About one in five are "struggling" financially.
Most respondents' are worried about finances and the stability of government-funded programs. Forty-one percent are very concerned they have inadequate retirement savings and will outlive their money. Despite these financial worries, 84 percent of new retirees say they are "satisfied" with their new life status. Satisfaction increases, however, as retirement savings and retirement income climbs.
Those surveyed are the first generation of workers straddling both traditional (defined benefit) retirement plans and self-directed 401(k) retirement plans introduced in 1981. Traditional pension plans provide 24 percent of their retirement income; income from self-directed retirement plans, as well as other investments and retirement savings, accounts for 11 percent. Social Security is by far the most important financial resource, representing 41 percent of retirement income.
Only 16 percent of recent retirees had a formal, written retirement plan although the number using professional financial advisors rises dramatically with assets. Fifty-four percent of those with net worth over $500,000 have used a retirement advisor, while only 16 percent of those with $150,000 or less have done so.
A fifth of respondents have a systematic withdrawal plan of their retirement savings, and on average, they take out about 6.7 percent a year. At that rate of withdrawal, a retiree's savings will be depleted in about 17 years, assuming a portfolio of 40 percent stocks, 50 percent bonds, and 10 percent cash at historic rates of return [stated by study].
Contrary to the common image of carefree retirees traveling, studying, and volunteering, their most important goals are having a secure retirement income and not worrying too much about money. Spending more time with family members places a distant fourth, followed by traveling and hobbies.
Recent retirees are not particularly interested in going back to school to learn something new. But 27 percent of recent retirees would rather be at their old job than retired.
The Key point for those about to retire:
The money theme carries through on recent retirees' biggest regrets. Seventy percent wish they had more retirement savings and 59 percent wish they had started saving earlier. What was their biggest surprise? It was that they have insufficient retirement income and high expenses. More than one-third wish their former employer or retirement plan provider had done more to encourage them to save sooner and faster.