New Transamerica Research Underscores the Financial Vulnerability of Retirees

Fewer than half of retirees (46 percent) agree that they have built a large enough retirement nest egg, with only 16 percent “strongly” agreeing and 30 percent “somewhat” agreeing, according to a new survey by nonprofit Transamerica Center for Retirement Studies. “Retirees’ circumstances regarding when and how they retired exemplify common risks: employment issues, ill-health, […]

Fewer than half of retirees (46 percent) agree that they have built a large enough retirement nest egg, with only 16 percent “strongly” agreeing and 30 percent “somewhat” agreeing, according to a new survey by nonprofit Transamerica Center for Retirement Studies.

“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,” said Catherine Collinson, CEO and president of Transamerica Institute and TCRS. “Retirees’ experiences also underscore the need for careful planning, including contingency plans if forced into retirement sooner than expected.”

A Precarious Existence: How Today’s Retirees Are Financially Faring in Retirement provides detailed survey findings about their lives in retirement, financial situation, living arrangements, and plans for long-term care. Retirees are still relatively young at age 71 (median), healthy, and have a positive outlook on life. They are spending more time with family and friends (61 percent), pursuing hobbies (44 percent), traveling (39 percent), and engaging in a variety of other activities. Most are taking steps to protect their health (although they can do even more). Nevertheless, they are financially vulnerable.

A Glimpse of Retirees’ Financial Vulnerability

“Many of today’s retirees were forced into retirement before they were ready, which translates into fewer years earning income in the workforce – and more time in retirement,” said Collinson. The survey finds that retirees are retiring at age 63 (median), with more than half (56 percent) indicating they retired sooner than they had planned. Among them, 54 percent cited employment-related reasons such as job loss, organizational changes, general unhappiness, and/or took an incentive or buyout. Forty-seven percent cited health and/or family-related reasons. Only 11 percent retired early because they had the financial ability to do so.

Retirees are getting by financially for the time-being. However, the survey finds indicators of their vulnerability:

  • Sixty-six percent of retirees indicate that Social Security will be their primary source of income over the course of their retirement. Those who are currently receiving benefits started at age 62 (median), which is the earliest age that most workers can claim benefits, albeit at a permanently reduced amount.
  • Retirees have an annual household income of $32,000 (estimated median). Twenty-five percent have a household income of less than $25,000, while only 15 percent have an income of $100,000 or more.
  • Many are still paying off household debt:
    • Among the 45 percent of retirees who have non-mortgage debt (i.e., credit card debt, car loans, student loans, medical debt, etc.), the estimated median is $4,000.
    • Among the 28 percent of retirees who have mortgage debt (including any equity loans or lines of credit), the estimated median is $52,000.
  • Given the time they have remaining in retirement, they have saved relatively little:
    • $75,000 (estimated median) in household savings including retirement savings (excluding home equity). Thirty-one percent have savings of less than $50,000, including nine percent who do not have any savings. Just 38 percent have savings of $100,000 or more.

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