Pre-Retirees Could Use More Retirement Planning Help

Although people approaching retirement have a strong vision for what success looks like, many are unsure of how to get there, and many are still afraid of running out of money, a TIAA survey finds.

Americans nearing retirement want to achieve the financial freedom that will enable them to live life to the fullest, spend time with loved ones, and have experiences that deliver true meaning and purpose, according to the latest TIAA Transition to Retirement Survey.

The survey found 95% of respondents say freedom from financial concern is important to their definition of success in retirement. Among individuals who are 55 to 68 years old and planning to retire in the next five years, 96% say the flexibility to do what they want, when they want is an important consideration to their definition of a successful retirement. Spending time with family and friends (93%), relaxing (92%) and having the time to travel (80%) also are important to near-retirees.

Retirement can be a moving target, and the survey reveals that many respondents have had to change their plans. More than one-third (37%) plan to retire at the same age as they planned 10 years ago, but an equal number (37%) say they now plan to retire later, and almost one-quarter (24%) plan to retire earlier than originally planned.

Although people approaching retirement have a strong vision for what success looks like, many are unsure of how to get there. Forty-three percent say they’ve met with a financial adviser or calculated how much money they will need annually in retirement—steps that may help boost retirement confidence. Fifty-four percent of those who have met with an adviser feel extremely or very prepared for retirement, compared to just one-third (34%) of those who have not.

In addition to professional support, nearly two-thirds of near-retirees turn to their significant others when discussing financial and personal plans in retirement. Men are much more likely to say they’ve discussed plans with their significant other than women (75% compared to 57%). Preparing for retirement together seems to help boost confidence: 66% of single pre-retirees feel unprepared, compared with 51% of their married counterparts. Only one-third of all respondents report discussing their plans for life and finances in retirement with their adult children.

NEXT: How pre-retirees are preparing

Though some people have anxiety about their readiness for the future as they get closer to retirement, 43% report feeling extremely or very prepared for the transition to retirement, and another 46% feel somewhat prepared for retirement.

More than half (55%) say they feel prepared to manage their income in retirement, yet only 21% anticipate their nest egg will last for their lifetime.

“Securing a source of income you can’t outlive is critical,” says Ron Pressman, chief executive officer of Institutional Financial Services at TIAA. “A reliable retirement income prepares people to handle financial or lifestyle challenges after they stop working, especially since many people are living longer in retirement.”

The survey found people who plan to rely on income from an annuity (65%) feel more prepared to manage their income in retirement than those who will draw down savings from a defined-contribution retirement plan (54%). But, only 17% of respondents have purchased an annuity as part of their retirement preparations.

When asked how they’ve already started preparing, 21% of respondents have discarded, sold or donated belongings as they get ready for the future. People nearing retirement also report they have:

  • Researched travel (36%);
  • Made plans to spend more time with new or current interests (31%);
  • Researched or visited new places to live (27%); and
  • Made plans with friends or family (25%).           

Not everyone plans to stop working in retirement. While 19% have considered volunteering, 31% of men and 22% of women also say they have investigated part-time or consulting work. Those figures may represent fears around financial stability or boredom in retirement, TIAA says.

A large portion of respondents plan to move in retirement, and many will choose a smaller home. While roughly the same number of men and women say they expect to move out of their current home (40% and 38%, respectively), they differ on where they’d like to go. Sixty-one percent of men plan to downsize to a smaller home, while only 49% of women say the same. Nearly one-quarter (24%) of women would like to move closer to family and friends, but only 10% of men plan to do so. These differences underscore how important it is for couples to communicate on all aspects of life in retirement—not just their finances.

NEXT: Regrets of pre-retirees

Looking back, the biggest regrets among people nearing retirement are financial, according to the survey results. The No. 1 thing those nearing retirement wish they had done differently is to have started saving for retirement earlier (55%). Nearly half (46%) wish they had saved more of their salary for retirement, and 36% wish they had invested those savings more aggressively.

Those regrets are followed closely by concerns surrounding health and lifestyle. One-third regret not taking better care of their health, and 27% would have put more time and thought into their post-retirement career.

Additional health concerns about the future—and how to pay for them—keep many pre-retirees up at night. Fifty-two percent are anxious about declines in physical health, and 43% are concerned about depleting their savings with health care costs in retirement. More than one-third (38%) fear they’ll run out of money to cover monthly expenses.

“Younger savers can learn a lot from those who will retire before them as they work toward their own retirement goals. Retirement is about beginning a wonderful new chapter, and not just about a moment in time or a number in the bank. Seek professional support and explore options for securing lifetime income so you can have the freedom to do what you love,” says Kathie Andrade, chief executive officer of Retail Financial Services at TIAA.

An executive summary of the survey findings is here.