Transamerica Center for Retirement Studies has released a report laying out the top concerns of retirees and how they are faring after the Great Recession of 2008. More than half (55%) report lingering consequences of the recession, including those who say they have only somewhat recovered (35%), have not begun to recover (8%) or don’t expect to ever recover (12%). Conversely, 45% said they either have fully recovered or were not impacted.
“Many American retirees are still recovering from the Great Recession while managing their households with modest retirement incomes,” says Catherine Collinson, president of Transamerica Center for Retirement Studies. “The good news is that most retirees are enjoying life, but the concerning news is that many may be ill-equipped to deal with a financial shock, such as the possible need for long-term care.”
The report, “The Current State of Retirement: A Compendium of Findings About American Retirees,” indicates that retirees’ first priority is just covering basic living expenses, cited by 42%. This is followed by health care expenses (37%), paying down credit card debt (25%), paying off mortgages (21%) and continuing to save for retirement (20%). Retirees’ average income is $32,000. However, for those who are married, it is $48,000, and for those who are single, it is $19,000.
The largest source of retirees’ income is Social Security, cited by 89%, followed by savings and investments (48%), pension plans (42%) and 401(k)s (37%). Those receiving Social Security first applied for the benefit at an average age of 62. Only 1% wait until age 70, the age at which one can receive the maximum monthly benefits.
There is a dichotomy between the percentage of retirees who think they will be able to live comfortably and those who are confident they have built a large enough nest egg. Seventy-two percent are somewhat or very confident they will enjoy a comfortable lifestyle, yet only 42% think their nest egg is adequate. Retirees’ average nest egg totals $119,000; for those who are married, it is $224,000, and for those who are single, it is $40,000.
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The reasons why folks retire earlier than planned are primarily due to employment-related reasons (66%). This factor climbs to 70% for those 70 or older. However, for retirees in their 50s, 52% said it was due to ill health. Only 12% of retirees of all ages said they left the workforce because they had saved enough.
On average, retirees expect to live another 28 years. Forty-one percent think their retirement years will surpass 30 years. Seventy-percent of retirees say they are in good or excellent health, but for those in their 50s, only 55% agree with that statement.
Retirees are overwhelmingly happy; 94% say they are a happy person and 90% say they are enjoying life. Eighty-four percent have a strong sense of purpose. However, for a large amount of people, their health and budgets are becoming issues; 31% say that everyday activities are becoming difficult, and 28% say that they are having difficulty making ends meet. Eleven percent feel isolated and lonely.
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Asked about their biggest retirement fears, and 44% say it’s declining health that will require long-term care. The same percentage is worried that Social Security benefits will either be reduced or eliminated. Forty-one percent fear they will outlive their savings.
While 54% of retirees indicate they have a retirement strategy, only 10% have it in writing. For those with a retirement strategy, the most common elements of that strategy are Social Security and Medicare (88%), ongoing living expenses (71%), health care costs (60%), basic living expenses (60%), income needs (60%) and investment returns (56%). Only 31% consider pursuing retirement dreams, a mere 30% inflation, 26% estate planning, 25% tax planning, and 23% long-term care insurance.
“Today’s retirees are facing formidable challenges in ensuring that they have adequate income to last their lifetimes,” Collinson says. “As Baby Boomers retire, Social Security and other benefit programs will likely be under even greater strain. It’s imperative that policymakers, employers, industry, individuals and families work together to find solutions so that the retirees of today and tomorrow can have a comfortable retirement.”
The report is based on a survey of 2,012 people age 50 and older conducted by Harris Poll. The full report can be downloaded here.