What You Must Know About Retirement: Realities vs. Expectations - Milestone Wealth Management - Ryan Cravitz

What You Must Know About Retirement: Realities vs. Expectations

I want to share a report published late last year by Transamerica Center for Retirement Studies. The study surveyed persons in the workplace and those already in retirement. Transamerica hoped to learn: Do the realities of retirement differ from retirement expectations of those currently in the workforce?

Transamerica’s findings were startling. The study revealed a strong disconnect between the reality of retirement and the expectations for retirement among those currently in the workforce.

Realities of Retirement

We would all like to establish a target date for our retirement. With a set date or age for retirement, we’re able to plan towards a specific deadline and measure our progress toward that goal. But Transamerica’s study learned that 60% of retirees had left the workforce earlier than planned. And not for reasons you would think…

  • 66% of them were forced into early retirements for employment-related reasons (i.e. job loss, buyouts, organizational restructuring).
  • A staggering 27% reported their retirements were forced by medical reasons.

On the other hand, only 33% of the study’s participants retired when they were planning to. Even still, consider these points…

  • 76% wish they had saved more for retirement,
  • 5% continue to work beyond retirement,
  • and another 2% are unemployed and looking for work.

Retirement Expectations

Those reaching the ends of their careers are doing so in better health than previous generations. In fact, 84% of those surveyed, aged 50 years or older, reported excellent health. And nearly 60% of them expect to live well into their 90s.

These findings mean most plan to live at least three decades in retirement. This expectation raises important concerns. For these younger Americans, their greatest fears are four very real possibilities:

  1. A reduction in Social Security benefits,
  2. Outliving their retirement savings,
  3. Long-term disability,
  4. And skyrocketing healthcare costs, including long-term nursing home care.

Yes, these are terrifying possibilities, and they’re all possibilities you must consider in developing your own retirement strategies. But how?

Prepare for Longevity in Retirement

In response to their study, Transamerica offered several recommendations…

  • Obviously, increase your retirement savings.
  • Leverage your catch-up contributions.
  • Pay off any high-interest debts you might owe.
  • Live within a written budget.
  • Find creative ways to reduce your expenses – get frugal.
  • Consider renting out a room in your home.
  • Try to delay Social Security benefits until full retirement age – especially if you’re in good health.
  • Expect to live a longer life in retirement, and plan accordingly.
  • Develop a plan for disability, long-term healthcare, and major declines in the stock market.
  • And get help from a financial professional.

This is a lot to consider.

We are living longer and often times being forced to retire sooner than we had intended. The need to plan for longevity in retirement is critical.