Looking back without regrets is a desire everyone shares, but unfortunately, many retirees find themselves facing this reality. As we embark on a new year, it is important to consider the regrets of retirees, especially if you are nearing retirement yourself. Despite improvements in savings habits and financial engagement, a significant number of retirees express regret over decisions made earlier in life when preparing for retirement.
According to Suzanne Ricklin, vice president of retirement solutions at Nationwide Financial, more than 8 in 10 workers over 45 regret not taking retirement saving more seriously when they were younger. This sentiment is echoed in a recent report by the Transamerica Center for Retirement Studies, which found that fewer than 1 in 4 retirees are very confident they can maintain a comfortable lifestyle throughout their retirement.
The survey revealed that the median household savings among retirees, excluding home equity, is only $71,000, with 1 in 4 retirees having no home equity at all. Many retirees express regret over not saving enough and wish they had saved more consistently. Catherine Collinson, CEO and president of Transamerica Institute, highlights that the lack of awareness, know-how, and resources hindered many retirees from adequately preparing for retirement, especially considering the shift towards self-funding retirement income.
For women, the shortfall often stems from a late start in saving for retirement. Research shows that more than 6 in 10 retired women wish they had started saving earlier, with a significant portion not prioritizing financial planning until later in life.
Another common regret among retirees is tapping into Social Security benefits too soon. Claiming benefits early can result in a much lower monthly benefit, potentially impacting financial security in the long run. Delaying Social Security benefits can significantly increase the monthly check for decades, yet many retirees start receiving benefits as early as age 62.
To avoid these common regrets, experts emphasize the importance of starting to save early, prioritizing retirement planning, and considering the long-term implications of decisions such as claiming Social Security benefits. By learning from the regrets of retirees and making informed choices, individuals can better prepare for a financially secure retirement.
Retirement planning is crucial. By delaying your benefits from your full retirement age (FRA) of 66 or 67 until age 70, you can earn delayed retirement credits, resulting in an approximate 8% annual increase in your benefit for each year you wait. While there are valid personal reasons for claiming early, like health issues or financial constraints, many retirees feel a psychological pull to start receiving benefits sooner.
Psychological ownership of Social Security benefits plays a significant role, according to Suzanne Shu, a marketing professor at Cornell University. Debt is a common obstacle for retirees, with nearly half reporting that it hindered their retirement savings. Furthermore, a large percentage of retirees carry credit card debt, and many find their spending exceeds their means.
The decision on when to retire can be regrettable, as evidenced by one-third of retirees wishing they had worked longer. Working past traditional retirement age can offer financial benefits, such as continued earning and saving, preserving retirement funds, and delaying Social Security claims. Unexpected circumstances, like health issues or company changes, often force individuals to retire earlier than planned.
Transitioning into retirement without emotional preparation and a clear plan can lead to regrets. Many retirees wish they had planned for the next phase of their lives sooner, considering factors like hobbies, identity, and social connections. Despite challenges, retirees generally report happiness, strong relationships, a positive outlook on aging, and a sense of purpose. Many find that retirement brings unexpected joys, such as increased time with loved ones and pursuing hobbies.
Overall, retired individuals often experience improved happiness and quality of life compared to their working years. Retired women, in particular, tend to rate their financial health positively. The data emphasizes the importance of preparation and mindset in navigating the transition to retirement successfully.
People in retirement are more likely to describe their financial health positively than those still in their working years, according to Fielder. It’s surprising that many women who have retired from the workforce seem to feel more secure about their finances than women who are still earning a paycheck. The runway ahead is different for everyone, so creating a life without regrets is not a one-size-fits-all endeavor.
“Retirement is highly personal,” noted Collinson. “People retire at different ages and for different reasons.” Whether you have questions about retirement, personal finances, or anything career-related, feel free to reach out to Kerry Hannon for guidance.
Surprisingly, many retirees find themselves happier in retirement than they anticipated. Collinson suggests that retirees with financial regrets should create a written financial plan for the future. This plan should consider factors such as living expenses, debt repayment, savings, and investments. It’s important to assess how your assets are allocated between bonds, cash, and stocks to ensure it aligns with your risk tolerance, age, and financial goals. Additionally, review sources of guaranteed retirement income, healthcare needs, insurance coverage, tax implications, and potential long-term care needs. Inflation should not be overlooked, as it can impact retirees’ purchasing power.
“In recent years, many retirees were caught off guard by inflation,” she said. “While we hope inflation is back under control, it remains a potential risk for retirees.” Despite this, only 19% of retirees currently have a written financial plan. Collinson emphasizes that even if you are already retired, engaging in retirement planning can provide valuable insights and potentially boost your financial security.
Kerry Hannon, a Senior Columnist at Yahoo Finance, is a respected career and retirement strategist. She is also the author of 14 books, including “In Control at 50+: How to Succeed in The New World of Work” and “Never Too Old To Get Rich.” For the latest personal finance news to support your investment decisions, debt management, home purchases, retirement planning, and more, follow her on Bluesky and stay updated on financial and business news on Yahoo Finance.
