Our featured article of the month, 2021 Retirement Confidence Survey, illustrates just a slice of the immense amount of data EBRI tallied in their annual survey of retirement expectations. A summary of the 35 page report can be found HERE and an infographic on retiree spending can be found HERE. As stated in part of the findings, many workers’ retirement expectations are quite different from current retirees’ realities. Understandably so as estimating future expectations or forecasting the future is a difficult endeavor.
Many workers have a good understanding of their current financial situation in regards to regular paychecks, health benefits, and retirement plan contributions. Readjusting that understanding and developing it into a future plan with expectations of financial sustainability, takes time and effort. Financial analysis and retirement planning are key processes designed to assist in the development of such a plan. Utilizing them to better appreciate the financial implications of one’s working and saving years is a prudent and useful undertaking.
However, while these steps are critical from an analytical viewpoint, a paradigm shift from one’s current reality to the anticipated future change is just as important from a holistic point of view. Bringing them together may help bridge the gap between one’s current worker reality and one’s future retiree experience.
While surveys are helpful to gain a view of the consensus, working alongside an experienced and dedicated advisor that can knowledgeably apply their skill to personalize the guidance, can prove to be invaluable, ultimately easing the fears of transitioning from the known to the unknown.
A deep dive into workers’ expectations in retirement versus actual income sources.
Will your retirement dreams match your reality?
That’s perhaps the most critical question to ask people who are currently retired. Was your retirement what you expected, or was it something else?
For more than 30 years, the Employee Benefit Research Institute (EBRI) has conducted the Retirement Confidence Survey, which gauges the views and attitudes of working-age and retired Americans regarding retirement and their preparations for retirement.1
Part of the survey takes a deep dive into workers’ expectations for sources of income in retirement versus retirees’ actual income sources.
Here’s a couple of highlights of the 2021 survey.
Only 33% of workers expect Social Security to be a significant source of retirement income. In reality, 62% of retirees say it’s a major source.
Further, more than 50% of workers believe that workplace retirement savings plans will be a significant source of retirement income. But the 2021 survey found that workplace plans are a major source for only 20% of retirees.
Surprised? We’re not. These numbers are consistent year after year. Here’s another nugget to consider: 26% of workers plan to work for pay in retirement. In reality, only 7% of retirees do.
For most, retirement is the “next chapter” in life. It’s critical that your finances support your retirement vision, so there are no surprises when it’s your turn.
Let us know if there’s a change in your retirement dream. We’d welcome the chance to hear what prompted the difference, and we’ll be sure to make any needed adjustments in your financial strategy.
This material was prepared by MarketingPro, Inc., and does not necessarily represent the views of the presenting party, nor their affiliates. This information has been derived from sources believed to be accurate. Please note – investing involves risk, and past performance is no guarantee of future results. The publisher is not engaged in rendering legal, accounting or other professional services. If assistance is needed, the reader is advised to engage the services of a competent professional. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All indices are unmanaged and are not illustrative of any particular investment.
1. Employee Benefit Research Institute, 2021 Retirement Confidence Survey