Retirees Say Income Replacement Needed Not As High As Pre-Retirees Think
Half of retirees say they spend less in retirement than they did in their working years.
Retirees are considerably less concerned than pre-retirees about their money lasting throughout retirement; they worry more about declining health, according to a survey by Massachusetts Mutual Life Insurance Co.
Ninety-one percent of retirees are confident their savings will last throughout their lifetime, compared to only 56% of pre-retirees. While 28% of pre-retirees worry they will not have enough money to enjoy themselves in retirement, this is only true for 7% of retirees. In fact, retirees’ biggest concern, cited by 29%, is health care costs.
Seventy-eight percent of pre-retirees worry they will not have enough income in retirement, compared to 51% of retirees. Other concerns of pre-retirees compared to retirees: changes in Social Security benefits (81% versus 69%) and low interest rates hurting income (69% versus 57%).
Sixty percent of pre-retirees believe they will need at least two-thirds or more of their pre-retirement income to live comfortably in retirement, but only 44% of retirees say this is actually true. Thirty-three percent of pre-retirees think they will need 75% or more of pre-retirement income, but 33% of retirees say they need less than 50%.
“While many retirees can manage their expenses to lower income levels in retirement, the rising cost of care may steadily reduce their lifestyles as they age,” says Tom Foster, head of retirement plans practice management at MassMutual. “It’s far better to err on the side of having more rather than less income than you anticipate needing, especially as costs for care continue to escalate.”
Seventy percent of pre-retirees think they will need to spend less in retirement than in their working years. While it is true that 50% of retirees say they spend less, 41% say they spend the same amount, and 8% say they spend more.
Eighty-four percent of pre-retirees wish they had started saving sooner, but only 55% of retirees say the same.
Greenwald & Associates conducted the online survey among 801 retirees and 804 pre-retirees in January.