Recent Retirees Regret Poor Retirement Planning

March 8, 2005 ( - Hindsight is certainly 20-20 when it comes to financial planning for retirement.

That was certainly true with a Fidelity Investments survey of recent retirees, which found that more than half (57%) wish they had done more to prepare during their last years in the workplace.

A Fidelity news release said that on the pre-retiree list of retirement preparation regrets are wishes that they had:

  • created a budget (21%)
  • determined an asset allocation strategy (19%)
  • developed an income source withdrawal strategy (18%)
  • better understood 401(k) plan payout options (19%).

Although the vast majority of pre-retirees (81%) are extremely certain that they will can enjoy the retirement lifestyle they desire, many have yet to complete the necessary preparation. Two thirds of pre -retirees (68%) have not completed a budget of anticipated income and expenses, while just under three quarters (74%) have not yet worked out an asset allocation strategy for managing their income in retirement while seeking continued growth for their savings.

“Workers approaching retirement often look to their peers who have already gonethrough the process for valuable lessons learned,” said Steve Descends, Executive Vice P president, Fidelity Institutional Retirement Services Company, in a Fidelity news release. “Those living in retirement now can provide valuable insight to people getting ready to make that transition from knowledge of the basic fundamentals such as the key elements of a successful income plan, to identifying resources that can help with critical decisions that need to be made. This can have a dramatic impact on the quality of life today’s pre-retirees will experience when they retire.”

Workers nearing retirement also showed a need for guidance and education on fundamental financial issues surrounding retirement. Just over a quarter (28%) reported that they fully understand how much they can spend monthly during retirement without outliving their savings and less than a quarter (23%) say they fully understand which retirement income sources to spend first to minimize taxes. Half are also unsure of the age when most people can withdraw money from a tax-deferred savings plan without incurring an early withdrawal penalty.

When recent retirees are asked what advice they would offer to a friend or family member within a year of retiring, they most often recommended seeking guidance to help with the retirement transition. Most retirees (77%) also reported that they didn’t ask their employer for assistance and guidance throughout the retirement process. Those who did, however, saw significant value in the guidance they received, with the vast majority (92%) saying they found it to be valuable, including 32% who say that they “could not have made the transition without it.”

The Fidelity Investments Retirement Transition Study was conducted by Richard Day Research, Inc. (RDR) in November and December 2004. RDR surveyed 749 pre-retirees within one year of retiring and 755 retirees within three years of having retired who work for, or have retired from, an employer with more than 5,000 employees and hold a DC or DB plan from that employer.