How do people enter retirement and how are they managing their income?
In a tell-it-like-it-is presentation here at the annual Retirement Industry Conference, co-sponsored by LIMRA, LOMA and Society of Actuaries, retirees revealed that retirement is not always planned.
“I was forced out,” said one. Another said, “I thought you were supposed to retire at 65.” Another waited until all the “big expenses” (home, car, etc.) were paid off. Yet another retired when “work seemed to interrupt all the things I wanted to do.”
One day, one man realized he had just “had it,” so he retired.
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The retirees told their stories in film clips shown by Eric Sondergeld, corporate vice president and director of retirement research at LIMRA International, Windsor, Conn. The clips came from six LIMRA/SOA focus groups in three cities. Participants were ages 60 to 72 and retired for two to 10 years. They had $50,000-$500,000 invested in employer-sponsored plans and total retirement savings of $100,000-$500,000 at retirement.
Most had a good sense of their living expenses, Sondergeld said. But their decision to retire often was made right before retirement. Significantly, “none had targets for how much to accumulate for a target retirement date.”
Also, only a minority had used a financial advisor to calculate their need.
“You just know when you’re ready,” said one retiree.
Some retirees did run numbers, but they did so without professional guidance. “You just sit down and figure it out,” said one.
But another claimed to have “planned and saved all along” and so felt “ready” when the time came. Many who made such calculations did so on a short-term basis, pointed out Anna Rappaport, a co-panelist and principal of Anna Rappaport Consulting, Chicago. That is, they figured how they could manage for the next three or four years but did not go beyond that, she said.
Most did find they now have more time to do things, said Sondergeld. However, they did not necessarily have targets for what they can afford to spend for activities, he said. Hence, one retiree overestimated living expenses, while another spent more on entertainment than expected.