Many retirees are in a “precarious” financial position in part because when they “started their working careers decades ago, the retirement landscape was quite different and many assumptions about retirement funding have since changed,” a report from the TransAmerica Center for Retirement Studies has said.
While some of them could have done more to save and plan, “others could have done everything right and still find themselves facing a savings shortfall,” it says, noting the shift in retirement financing from traditional defined benefit plans to self-funded plans.
At the same time, “Life expectancies have increased, and now people have the potential of living longer than in any other time in history. Although inflation rates have been low, housing and healthcare-related costs have sky-rocketed.”
A survey of more than 2,000 retirees found that they overall are enjoying retirement, having a positive outlook on life and spending time on activities they enjoy. However, a quarter say their standard of living has decreased, and two-fifths cited outliving their savings and investments as one of their top fears. Further, 28 percent have mortgage debt and 45 percent have non-mortgage debt such as credit card balances, car loans and student loans.
Only a tenth are working for pay but among those two-thirds said they are doing it because they need the money as opposed to other reasons such as continuing to make a contribution in their fields. Also a tenth said they retired later than they had planned and among those three-fourths cited financial reasons, including a conclusion that they hadn’t saved enough for retirement by their originally planned date.
“Retirees’ circumstances regarding when and how they retired exemplify common risks: employment issues, ill-health, and financial need. They offer a cautionary tale for those currently in the workforce on the importance of maintaining good health, financial planning, and competitive job skills. Retirees’ experiences also underscore the need for careful planning including contingency plans if forced into retirement sooner than expected,” it said.