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Do Retirement Expectations Need to Be Adjusted?

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In the past, we’ve discussed what retirement expectations are today – such as what Americans consider to be an ideal retirement. But on the other hand, this is balanced by recurring fears about retirement security. For one, many Americans worry about whether they will have enough retirement funds to live comfortably.

Then there is the issue of unrealistic expectations. A growing body of data shows Americans believe they’re more ready for retirement than they actually are. A recent study by the Transamerica Center for Retirement Studies showcased this trend. The study surveyed 4,000+ workers aged 50 and 2,000+ recent retirees, and then compared the workers’ responses with the retirees’ recent experiences in retirement.

What Does the Study Say about Retirement Expectations?

The TCRS study found current retirees expect a long retirement, with 28 years being the median response. Of all retirees, 41% announced plans to be retired for 30 years.

Overall, among surveyed American workers the study reported:

• 15% strongly agreed they had saved enough retirement funds, and 33% somewhat agreed they had saved enough
• 35% had not made a retirement plan, and just 14% had a written plan
• 67% planned to not retire or keep working past when they were 65 years old; 39% expected employment to be a retirement income source
• The approximate median of reported total household retirement funds was $135,000, with $177,000 as the median for married workers and $48,000 for unmarried workers

Comparatively, the results from surveying retirees about their recent experiences were:

• 61% retired before age 65, with the median age at retirement being 62 years old
• 46% didn’t have a retirement plan, with only 10% having a written plan
• Only 6% of retirees were actually using employment as a retirement income vehicle (or actually earning income from working)
• 16% strongly agreed they had saved enough, and 30% agreed somewhat they had saved enough
• Among retirees, the approximate median for reported total household savings was $131,000, with $225,000 as the median for married retirees and $53,000 for unmarried retirees

In other words, for many of the people the retirement savings simply weren’t enough to cover a 30-year retirement span. Working longer is a good response to this. However, the current retirees’ answers show that people’s expectations of working in retirement – and what they actually end up doing – can widely differ.

Other Factors to Keep in Mind

Among these distinctions, the TCRS study illustrates other factors:

• The experience of current retirees in working for income in retirement shows it may be unrealistic to assume you can keep working for extended periods at your current pay rate
• Between the workers and retirees’ responses, it shows a successful retirement doesn’t happen by accident – it’s the result of careful planning beforehand
• Factors such as increased life expectancy, advancements in technology, looming financial challenges, and evolving healthcare mean there are more years to account for in retirement planning
• Vision for retirement differed heavily between the workers (with future expectations) and current retirees (who have a better grasp of what their retirement situation would look like)
• Retirees also reported some notable facts regarding retirement preparation: 76% said they wished they had saved more, 68% wished they had learned more about retirement saving and investing, and 41% said they should’ve relied upon financial experts for assistance

What’s the Solution?

In the end, the study shows there’s no alternative to planning ahead. No matter what stage you’re at in your working or retirement journey, take time to secure your future now. The first step is being educated.

We invite you to use the articles and resources here on SafeMoney.com to fully educate yourself. There’s content on hot button financial topics and different vehicles for retirement security. Remember, there’s no across-the-board solution for everyone – everybody has different needs, circumstances, and objectives.

When you're ready for personal help from a financial professional, SafeMoney.com can help you. Use our Find a Licensed Advisor section to connect directly with an independent financial professional, and to request a personal strategy session to discuss your needs and goals. And should you have any questions or concerns, call 877.476.9723.

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