Understanding Your Financial Situation Compared to Other Retirees
- Megan Waters, CFP®
- Mar 24
- 6 min read
Updated: May 18
Retirement is a significant life transition. It brings exciting opportunities along with important challenges.
The freedom to pursue personal interests comes with the need to manage limited financial resources.
A recent report by the Transamerica Center for Retirement Studies examined how retirees are faring in today's post-pandemic economy.
The Latest Insights on Retirement
The 24th Annual Retirement Survey reveals insights into American retirees' financial situations, living arrangements, health concerns, and future plans. The survey gathered responses from 2,404 American retirees.
Let's explore what they discovered and its implications for current and future retirees.
The Changing Retirement Landscape
Today's retirees have experienced significant shifts in retirement in America. During their careers, they witnessed:
A move away from employer-funded pension plans towards employee-funded 401(k) plans.
Growing expectations for workers to self-fund more of their retirement.
Increasing concerns about the long-term funding of Social Security.
The economic impacts of a global pandemic.
These changes have created a complex environment. Retirees must navigate financial challenges while enjoying their retirement years. The survey provides valuable insights into how they manage these challenges.
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Retirement Perceptions: The Good and the Bad
When asked about their retirement experiences, retirees showed overwhelmingly positive associations. Here are some notable statistics:
86% selected positive words like "freedom" (68%), "enjoyment" (58%), and "stress-free" (41%).
Conversely, only 37% reported negative words, including "health decline" (21%) and "financial insecurity" (18%).
Despite some challenges, most retirees hold a positive outlook on this stage of life. Their top priorities include "enjoying life" (70%) and "being healthy and fit" (67%).
The Financial Reality for Today's Retirees
While attitudes toward retirement are generally positive, the financial landscape is complex.
Retirement Income Sources
Social Security remains the primary income source for many retirees:
91% receive some Social Security income.
For 58%, it's their primary income source.
Only 20% rely primarily on personal savings.
18% count on pensions as their main income.
The median age for starting Social Security benefits is 63. Almost one-third (29%) claim benefits at the earliest possible age of 62, despite the permanent reduction in benefits that follow. Just 4% wait until age 70 to maximize their benefits.
Household Income and Savings
According to the survey, the median annual household income for retirees is $55,000. However, disparities are evident:
36% of retirees have household incomes below $50,000.
32% find themselves between $50,000 and $100,000.
Only 20% earn between $100,000 and $200,000.
A mere 8% have incomes exceeding $200,000.
Concerning savings:
The median total household savings (excluding home equity) sits at $71,000.
14% report having no retirement savings.
29% have less than $100,000 saved.
Only 22% have saved over $500,000.
Emergency funds present a worrying picture:
Median emergency savings amount to $10,000.
17% have no emergency savings.
31% aren't sure how much they have saved for emergencies.
Debt Among Retirees
Debt is still a concern for many retirees:
48% have non-mortgage debt averaging around $5,000.
30% still carry mortgage debt, with a median amount of $68,000.
These financial realities explain why 30% of retirees report difficulties in making ends meet. Despite 70% feeling confident about maintaining a comfortable lifestyle throughout retirement.
How Retirement Happens
Interestingly, retirement doesn't always unfold as planned:
58% retired sooner than expected.
Only 36% retired when originally planned.
A small 6% retired later than intended.
Those who retired early often cited various reasons:
46% mentioned health issues.
43% pointed to employment-related reasons such as job loss or organizational changes.
Only 21% retired early because they could financially afford to.
Housing and Living Arrangements
Where retirees live plays a significant role in their retirement experience:
62% stayed in the same home after retiring.
38% moved to new homes.
The reasons for moving included:
Moving closer to family and friends (36%).
Downsizing for cost savings (33%).
Reducing expenses (26%).
Starting a new life chapter (24%).
Retirees prioritize affordable living costs, proximity to family, and access to healthcare when choosing where to live.
Health and Wellbeing in Retirement
Health remains a critical concern for retirees:
73% are worried about their health as they age.
37% fear the declining health that may require long-term care.
28% worry about cognitive decline or dementia.
Most retirees report engaging in health management practices, such as:
Seeking medical attention when needed (75%).
Getting routine physicals and screenings (71%).
Socializing with friends and family (64%).
Keeping up with vaccinations (64%).
However, fewer are focusing on critical areas like stress management (39%) and mental health support (13%).
Planning for the Long Term
Most retirees expect long lives, with a median anticipated lifespan of 90, suggesting a typical retirement span of about 29 years. Despite this, many lack proper planning:
19% possess a written financial plan for retirement.
44% have an unwritten plan.
37% have no financial plan at all.
When it comes to long-term care, many retirees aren't fully prepared, relying on family or friends instead of professional services. Legal documents show similar gaps, with 52% having a will and 28% lacking any legal documents.
Insights for Future Retirees
The survey offers valuable insights that younger generations should heed:
76% wish they had saved more consistently.
68% wish for better knowledge about retirement saving.
49% feel that debt hindered their ability to save properly.
Future retirees should take practical steps based on the experiences of today’s retirees. By heeding their wisdom, they can enhance their own retirement readiness.
Retirees' Policy Priorities
In discussing government policy, retirees highlighted the following priorities:
Addressing Social Security funding issues (82%).
Tackling Medicare funding shortfalls (71%).
Making healthcare and prescription drugs more affordable (64%).
Ensuring that all workers can save for retirement at work (50%).
Making long-term care services affordable (45%).
What This Means for You
Whether you are currently retired or still planning for retirement, the insights from this research offer essential takeaways.
For Current Retirees:
Create a written financial plan to ensure your savings last your lifetime.
Consider delaying Social Security for maximum benefits.
Address long-term care needs early to avoid crises later.
Establish important legal documents like wills and advance directives.
Prioritize both physical and mental health for holistic well-being.
For Future Retirees:
Save consistently and begin early.
Educate yourself about retirement planning.
Manage debt strategically to ease burdens.
Consider phased retirement for a smoother transition.
Prepare for an earlier-than-anticipated retirement.
See How Our Firm Can Help You Retire With Confidence
Will my money last in retirement? Find out when you can retire and if you'll maintain your lifestyle.
How should I invest in retirement? Get personalized investing strategies.
How can I reduce taxes in retirement? Find tax strategies relevant to your situation.
The Big Picture
The Transamerica survey presents a portrait of retirees who generally enjoy retirement despite encountering financial limitations. Social Security serves as a financial backbone, while personal savings play a supportive role. Protecting Social Security is crucial for current and future retirees.
Many retirees leave the workforce earlier than expected due to various unforeseen factors, emphasizing the significance of flexible planning and saving early.
Yet, the most valuable insight comes from current retirees who highlight their regrets, including not saving enough and not learning more about investing. These simple yet impactful takeaways guide everyone to improve retirement prospects.
Final Thoughts
Retirement is a personal journey filled with unique circumstances. The insights from this survey provide essential guideposts, shedding light on common challenges. Learning from retirees’ experiences can help us make informed retirement planning decisions.
Despite financial obstacles, the majority of retirees still associate this time of life with positive feelings of freedom and enjoyment. Balancing financial security with non-financial pursuits contributes significantly to how satisfying retirement can be.
Through thoughtful preparation for both financial and personal aspects of retirement, we all have the chance to join the 86% of retirees who view this stage positively.
About the author:
Financial Advisor
Megan Waters is a CERTIFIED FINANCIAL PLANNER™ professional at Covenant Wealth Advisors. With over 14 years of experience, Megan graduated from the Honors College at the College of Charleston, obtaining a degree in Economics with a minor in Environmental Studies.
Disclosures: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond, Reston, and Williamsburg, VA. Registration does not imply a certain level of skill or training. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal. The views expressed here are subject to change based on market conditions. This article features data from the TransAmerica's Center for Retirement Studies 24th annual retirement survey. Consult with legal or financial advisors for your individual circumstances.
