Apparently, only 7% of retirees plan to draw down their retirement savings to support and enjoy their retirement. Image: iomis/Shutterstock.com
The Employee Benefits Research Institute (ebri.org), conducts an annual ‘Retirement Confidence Survey” and some of the 2023 results are not surprising, especially that inflation is a major concern of both retirees and those approaching retirement.
It’s also not surprising that more retirees (73%) feel financially confident about their retirement than do current employees (64%)
What did appear, at least to me, to be surprising was that one-half of retirees plan (or at least hope) to maintain their current level of retirement assets throughout their retirement. Pardon me, but I thought that the main reason we set money aside in the Thrift Savings Plan and other retirement investments was so that we could draw it down to support our retirement lifestyle. Apparently, only 7% of retirees plan to draw down their retirement savings to support and enjoy their retirement.
What was not apparent in the survey was why so many retirees and potential retirees did not expect to draw down their retirement savings balances.
· Were they concerned that their children, or other heirs, would not have retirement income such as Social Security and workplace pensions?
· Or did they think that Social Security and other types of retirement income (pensions, part-time work, etc.) would be enough to support themselves at a level they would find satisfactory?
· Perhaps they were so good at saving, that they couldn’t wrap their heads around doing a 180 and spending down that which they had worked so hard to amass?
If we hope to have a retirement lifestyle that is similar to that we enjoyed before retirement, financial planners suggest that we strive for 80% of our pre-retirement income. In most cases, our FERS annuity and our Social Security will replace somewhere in the vicinity of 60%. We might very well need the extra income we can get from the TSP and other retirement savings instruments such as Individual Retirement Arrangements (IRAs).
THE NUMBERS JUST KEEP GETTING BIGGER. Thirty or so years ago, one of the rules of thumb that applied to asset allocation was to subtract one’s age from 100 and the result was the percentage of investments that should be in stocks. Maybe ten years ago, I read that one should subtract their age from 110 to get that percentage. A couple months ago I read in Kiplinger’s Retirement Report that the minuend (remember subtraction back in grade school) should be 120. Has our life expectancy really grown that much or is something else afoot?
John Grobe, President of Federal Career Experts, is an expert in the area of federal employee retirement and benefits. This expertise comes from his 26 year federal career in which he managed the retirement program in a 3,500-employee office of a large federal agency.
5 Steps to Protect Your Federal Job During the Shutdown
Over 30K TSP Accounts Have Crossed the Million Mark in 2025
The Best Ages for Federal Employees to Retire
Best States to Retire for Federal Retirees: 2025
Primer: Early out, buyout, reduction in force (RIF)
See also,
OPM Guidance Addresses Pay Issues arising During, After Shutdown