Recently Transamerica Insurance produced a report titled “The Current State of Retirement: a Compendium of Findings about American Retirees.” Published only a few months ago, it cited ten important facts about today’s retirees. In short the study indicates retirees are optimistic, but that optimism masks a surprising lack of adequate preparation.
What did the Transamerica study show about today’s retirees? First, when it comes to financial priorities, their list is quite basic. Most cited covering daily living expenses, paying medical bills and paying off the mortgage as the top three demands on their retirement income. Sadly, in a finding Transamerica calls “alarming,” fully one-quarter say they are still paying off credit card debt.
A second finding should come as no surprise – almost all (about 90%) of respondents say Social Security is their most important income source. Everything else – savings, investments, retirement accounts is much farther down the income ladder. Interestingly, the average income in the study was relatively modest, with a huge gap between income for married couples ($48,000 average) and single adults ($19,000 average). Surprisingly only a small fraction of respondents delayed Social Security until age 70, the age when monthly benefits reach their maximum. Most started benefits at 62.
In the areas of savings and planning retirees have some issues. Almost three-fourths of retirees express confidence that they will be able to maintain their lifestyle as they age, yet fewer than half claim to have a big enough nest egg to accomplish that goal. Combine a fairly paltry savings performance (the median retirement account savings is estimated at $119,000 for couples but for singles it’s far less, about $40,000) with the fact that a significant majority of people retire sooner than they expect to, and there does seem to be an alarming lack of willingness to look more honestly at retirement needs and expectations. What’s more, even those who say they have a plan are failing to take into account some of retirement’s very real expenses, including inflation, long term care insurance, tax planning and so on. Retirees ignore these hidden costs at their peril.
Without a solid plan, your assets will be at risk, and you will be far more likely to become a burden to your loved ones. It doesn’t have to be that way. That’s why you should put together a plan that encompasses all aspects of your retirement security: a plan that encompasses legal affairs, housing choices, financial security, family relationships, and the medical coverage to meet your needs as you age.
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