The Transamerica Center for Retirement Studies (TCRS) released "Unlocking Secrets of Retirement Readiness: Meet the Everyday People Who Are 'Power Planners,'" which shows the majority of employees (62%) said they are less confident about retirement since the start of the recession, and many Baby Boomers (43%) now expect to work longer and retire at a later age.
Catherine Collinson, TCRS president and author of the survey, told PLANSPONSOR, "The conversation on this began about two years ago, as we were finding that more people were thinking about the question of whether to work past the age of 70. We decided last year to think about that in terms of retirement readiness and what its definition is now. When we started to research the topic, we found that there are now a myriad of definitions for 'retirement readiness.' The old definition of building up a retirement nest egg, retiring at 65 and no longer have to set your alarm clock no longer applies. The survey allowed us to introduce our own definition of retirement readiness."
The survey defined retirement readiness as a state in which an individual is well-prepared for retirement, should it happen as planned or unexpectedly, and can continue generating adequate income to cover living expenses throughout their lifetime through retirement savings and investments, employer pension benefits, government benefits, and/or continuing to work in some manner while allowing for leisure time to enjoy life.
Five key elements of retirement readiness were identified:
- A clear vision of retirement, including retirement dreams/expectations, expected retirement age and any plans to continue working in retirement;
- A retirement strategy that incorporates savings needs, potential risks and a back-up plan if the participant is forced to retire sooner than expected;
- Retirement income, including savings and investments, pension benefits, and government benefits;
- Knowledge to make informed decisions about retirement investments, government benefits, and health care; and
- A family understanding, including an open dialogue about finances and agreement on any expectations of support.