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Survey flags gaps in household incomes, savings among retirees

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The annual estimated median household income among retirees is $32,000. But there is a wide disparity between those who are married and unmarried.

So reports Transamerica Center for Retirement Studies (TCRS) in a new study, “The Current State of Retirement: Pre-Retiree Expectations and Retiree Realities.” The report features findings from TCRS’ first-ever survey of retirees, identifying retirement dreams, disconnects, and vulnerabilities. The study uncovers shifts in the retirement landscape, including changing benefits and work patterns, as well as where public policy changes are needed. 

The report observes a wide disparity between the media household income of retirees who are married ($48,000 estimated median) and those who are unmarried ($19,000). By comparison, age 50+ workers report higher levels of income ($71,000) including those who are married ($84,000) and unmarried ($35,000).

The total household savings in retirement accounts is $135,000 (estimated median) among age 50+ workers; however, the survey found a wide disparity between those who are married ($177,000) and unmarried ($48,000). Among retirees there is also a wide disparity in retirement savings between the married ($225,000) and unmarried ($53,000).

The report also finds that only 33 percent of retirees say they used a professional financial advisor before they retired, while 41 percent say that they currently use an advisor in retirement. Among age 50-plus workers who are investing for retirement, 41 percent currently use an advisor.

Among retirees and age 50-plus workers who use a financial advisor, they most often use their advisors to make retirement investment recommendations (81 percent each). Retirees use their advisors for calculating their retirement income needs (29 percent), developing strategies for spending down their savings to ensure they last their lifetime (29 percent), general financial planning (26 percent), and tax planning and preparation (24 percent).

Age 50-plus workers use their financial advisors for general financial planning (36 percent), calculating savings goals (36 percent), and recommendations about other retirement-related products (33 percent). Age 50-plus workers (65 percent) are more likely than retirees (54 percent) to have some form of retirement strategy.

However, few retirees (10 percent) and age 50-plus workers (14 percent) have a written strategy. Among those with a strategy, written or unwritten, most address Social Security and Medicare benefits and ongoing living expenses.

Many factor a retirement budget, savings and income needs, healthcare costs, and investment returns. Few strategies address pursuing retirement dreams, inflation, estate planning, tax planning, and contingency plans. Seventy-six percent of retirees wish that they would have saved more on a consistent basis.

According to the report, 67 percent of age 50-plus workers are planning to work past age 65 or do not plan to retire. Their expected retirement age is 67 (median).

Such expectations differ dramatically from the experience of retirees. Retirees were asked to self-identify as either fully retired or semi-retired. Ninety-one percent of retirees say they are fully retired and they retired at age 62 (median). Sixty-one percent retired before the age of 65. As for the other nine percent of retirees who self-identify as semi-retired, they expect to stop working altogether and fully retire at age 70 (median).

Most age 50-plus workers (54 percent) plan to continue working, at least on a part-time basis, after they retire, the report notes. However, among the retirees surveyed, including those who are fully retired and semi-retired, only five percent are currently working.

Two percent are unemployed but looking for work. Prior to retiring, retirees (43 percent) were far more likely than age 50-plus workers (24 percent) to have envisioned retirement as a point in time at which they would immediately stop working and begin pursuing their retirement dreams.

Age 50-plus workers (62 percent) are far more likely than retirees were when they were working (38 percent) to envision retirement as a transition that involves shifting from full-time to part-time, working in a different capacity, or working as long as possible until they can’t work anymore. 

Other insights about the surveyed retirees include:

  • 68 percent wish they would have been more knowledgeable about retirement saving and investing

  • 53 percent would have liked to have received more information and advice from their employer on how to achieve their retirement goals

  • 48 percent waited too long to concern themselves with saving and investing for retirement; and

  • 41 percent agree that they should have relied more on outside experts to monitor and manage their retirement savings.

See the full report here.