Nearly 3 in 10 Americans Have a Discouraged Retirement Outlook

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After many working years, most people would probably see retirement as a positive thing. Yet while it’s true for many Americans, a recent survey by Nationwide shows greater-than-expected retirement dissatisfaction. Nearly 3 in 10 recent retirees (28%) said that their lives are in worse in retirement than before. Moreover, just 2 in 10 future retirees expect that life will be better in retirement.

What was the reason for the retirement humbug? Financial issues, mostly. Among the 28% of unhappy retirees, 78% pointed to income as a reason while 76% blamed the cost of living.

The Nationwide Retirement Institute also noted other findings that are instructive for income and retirement planning. Let’s dive into some more of those takeaways now.

Other Important Retirement Findings

According to Nationwide, many Americans held expectations that wouldn't match up with their financial reality in retirement. Much of this expectations-to-reality gap was attributable to retirees overestimating their Social Security benefit payments and underestimating how much healthcare costs would be.

For instance:

  • Over half of future retirees (53%) and recent retirees (59%) expected Social Security to cover half or more of their expenses in retirement
  • Among current retirees, nearly a quarter said their Social Security payments are less or much less than expected (25% of recent retirees and 23% of retirees retired for 10+ years)
  • 1 in 3 retirees (34%) reported health issues are disrupting their retirement
  • 24% of retirees with health issues noted that expenses of healthcare keeps them from living the retirement they want
  • Among those with health issues, three-quarters of retirees (75%) reported that health problems arose sooner than they expected
  • Nearly two-thirds (65%) of those with earlier-than-expected health issues said the health problems arose more than five years earlier than they expected

However, Social Security is designed to replace around 40% of the average wage earner’s income in retirement, according to the Social Security Administration. Healthcare costs themselves can be hard to pinpoint, as they will vary among retirees based upon family history, physical condition, and other factors.

However, Fidelity has estimated that a 65-year-old couple retiring in 2017 may pay up to $275,000 in retirement healthcare costs. Going even further, consulting firm HealthView Services pegs total lifetime healthcare costs for a 65-year-old couple today at $404,253 (or $606,662 in future dollars). That figure includes total Medicare payments as well as costs not covered by Medicare, including co-pays, out-of-pocket expenses, expenditures for dental and eye care, and more.

The Social Security Dilemma

As a source of guaranteed income, Social Security benefits tend to play an important role in covering monthly retirement living expenses.

But Nationwide reports that older Americans don’t understand some basic facts of Social Security. In the survey, 91% of older retirees didn’t know what factors determine the maximum benefits they could receive.

The survey also found that retirees were more likely to overestimate their Social Security benefit payments overall than they were to underestimate them.

Among recently retired persons and individuals retired for 10+ years, about three-quarters wouldn’t change the age at which they had taken their benefits. 78% of recent retirees wouldn’t change their claiming age. Likewise, 73% of 10+ year retired retirees said they wouldn’t change their claiming age, either.

A notable finding for retirement confidence was relating to guidance from financial professionals. The survey found retirees working with a financial advisor in 2017 were more likely to say they wouldn’t change their claiming age, if they could, than in 2016. The proportions of retirees saying this was 85% in 2017 versus 73% in 2016.

On the whole, though, just 17% of the surveyed retirees had received advice relating to Social Security from a financial professional. For retirement investors as a whole, this underscores the importance of hiring the right retirement planning company to help you plan for your future.

Preparing for a Secure Retirement Future 

These survey findings highlight that a comfortable retirement lifestyle doesn't happen by accident. Rather, it's the result of careful planning, preparation, and strategy. Other studies suggest that working with a financial professional specializing in retirement planning can yield powerful outcomes. The Insured Retirement Institute reports in one survey, 75% of Americans working with a financial professional have at least $100,000 saved for retirement. Comparably, less than one-half of those without a financial professional have at least $100,000 in retirement savings.

So, a retirement-focused financial professional can help you avoid costly retirement and income risks. They can also help you achieve more confidence in your retirement and prepare you to enoy the lifestyle you have worked hard for. When you are ready for personal guidance, financial professionals at stand ready to assist you, starting with a no-obligation consultation.

Use our "Find a Financial Professional" section to connect with someone directly. Should you need a personal referral, call us at 877.476.9723.

Author: Ian

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