How Retirement Expectations Differ from What Actually Happens in Retirement

Retirement Expectations vs. Reality

How Retirement Expectations Differ from What Actually Happens in Retirement

You’ve dreamt of retiring for some time now. Maybe you’ve always seen yourself living outside the United States, where your money may go a little farther, or traveling the world. Maybe you see yourself in Arizona, California or Florida, enjoying the warm weather and the outdoor lifestyle. You’ve worked hard and you deserve to live the life of leisure you’ve envisioned.

Now reality check: The new post-Great Recession economy has taken its toll on retirees, as well as those looking forward to retirement in the near future. A recent AARP survey reports 36 percent of workers age 55+ have less than $10,000 in savings and investments, nowhere near the amount needed for financial security after they leave the labor market.

This new economy has also affected the younger generation. According to a 2013 survey of 1,000 individuals age 25 and older by the Employee Benefit Research Institute, some 22 percent of workers said the age at which they expect to retire has increased. Respondents cited a poor economy and the inability to afford retirement as their main reasons for the delay. Almost 10 percent of workers said they’ll never retire. At the same time, the number of people expecting to retire early, before age 65, is just about half of what it was 20 years ago.

Another study released by the Employee Benefits Research Institute shows 18 percent of workers report being “very confident” they’ll have enough money for a comfortable retirement, an increase from 13 percent in 2013. Thirty-seven percent say they are “somewhat confident” and 24 percent are “not at all confident.”

The Harvard School of Public Health, in association with the Robert Wood Johnson Foundation and NPR, set out to measure the differences between the expectations and realities of retirement. What they found might surprise you.

QUALITY OF LIFE: The first thing the survey looked at was a person’s overall lifestyle. Basically, it was a measurement, just as it sounds: how a person who is planning to retire feels their overall life will be, and then how it actually ends up for those who are already retired. For those who are planning to retire, only 14 percent believed their overall quality of life would be worse once they reached retirement. However, of those surveyed who were already retired, 25 percent stated their overall quality of life was worse than before.

HEALTH: It is a fact of life as we get older, we are more susceptible to illness and injury. According to a 2012 AARP-sponsored poll of 1,852 registered voters, including 1,331 age 50 and older, health and longevity are not topics, which often come up in conversation among Baby Boomers. Only about half of those nearing retirement said they had discussed the issues of poor health, disability and death with their spouse or doctor. And, according to a 2009 Pew Research Center survey of nearly 3,000 adults, Boomers felt at least 10 years younger than their actual age. They peg “old age” at somewhere above 75.

Despite these facts, only 13 percent of people who took part in the Harvard School of Public Health survey and were planning to retire, believed their health would worsen in their later years. The reality, according to already retired, however, was 39 percent had worse health issues than before they retired.

FINANCES: Making sure you maintain your finances throughout your retirement can be a harrowing ordeal, one many people have difficulty achieving. It’s often difficult to keep the money coming in, unless you’re working at least part-time in your later years. Even so, 22 percent of those who were not, yet, retired expected their finances to decrease. In reality, 35 percent of participants who are already retired claimed their financial outlook went down after retirement.

EXERCISE: Of the participants who were still waiting for retirement, 1 percent expected a detriment to their ability to exercise. But on the other side of the retirement line, 34 percent stated their exercise capabilities lessened.

TRAVEL: Whether it’s taking a road trip across the country or flying half-way across the globe to an exotic location, many of us simply love to get out and explore the world surrounding us.  Perhaps that is why only 11 percent of those surveyed, who were planning to retire, predict their travel would lessen.  For those already retired, 34 percent reported they were not able to travel as much as they had hoped for in retirement.

There is a major difference between what people expect in retirement and real life. As you go about planning for your retirement, work with a financial advisor to help plan for the future, your expectations, reality and the unknown.

For more information on Summit Brokerage Services, visit www.joinsummit.comor contact us at (800) 354-5528.

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