The 'Concerning Trends' in Retirement Now
Americans are less satisfied with their life in retirement and cite inflation and higher healthcare costs as just two of the problems they're facing.
Recently, we wrote about the results of the Retirement Confidence Survey, conducted annually by the Employee Benefit Research Institute. EBRI followed up with a deeper dive into spending trends among retirees with its 2024 Spending in Retirement Survey.
I spoke with Bridget Bearden, research and development strategist with EBRI and author of the study, about its conclusions.
Your survey uncovered several 'concerning trends.' What were they?
We asked retirees how their current life aligns with their pre-retirement expectations and how satisfied they are with life in retirement. In each case, their responses were lower than in 2020 and 2022.
From just $107.88 $24.99 for Kiplinger Personal Finance
Become a smarter, better informed investor. Subscribe from just $107.88 $24.99, plus get up to 4 Special Issues
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
At the same time, 31% of retirees said their spending was higher than they could afford in 2024, up from 17% in 2020 and 27% in 2022.
What is behind the trends?
Three factors:
- Lack of sufficient savings
- Inflationary pressures
- Rising credit card debt
Half of respondents said they had saved less than what was needed for retirement.
When we asked an open-ended question about why they rated their satisfaction with retired life as they did, inflation was a major reason.
Some typical responses: “Inflation is killing me,” and “Inflation has caused me to tighten up and forgo the things I wanted to do.”
So people have taken on more credit card debt?
Among the 63% of retirees who reported having outstanding debt, 68% had credit card debt. That was up from 43% in 2020 and 40% in 2022.
On a more positive note, only one in 10 respondents described their overall debt load as unmanageable or crushing.
You also asked about emergency savings
Overall, 59% of retirees said they have three months of emergency savings, down from 69% in 2022.
Yet 36% have experienced unexpected spending needs since retiring. The most frequently cited reasons were higher-than-expected housing or healthcare costs.
Number three on the list: children or grandchildren who needed help.
But home equity has risen significantly
Respondents reported an increase of 47% in the median value of real estate equity since the start of retirement. That aligns with the growth in home values during the same period, which was a median of seven years.
At the same time, their newfound real estate wealth did not make them more willing to take risks with their financial assets.
What are their main sources of income?
Retirees in our survey were between the ages of 62 and 75, and 83% reported receiving income from Social Security.
Another 39% said they are receiving guaranteed income through a workplace pension or annuity, with pensions more prevalent among retirees from the public sector.
On the other hand, 20% reported receiving income from an individual retirement account, and IRA income was more common among private-sector retirees.
Are there bright spots in the study?
Retirees who reported more-positive outlooks on spending and well-being cited several factors:
- Longer tenure with their employer
- Fewer employers over a career
- More years participating in a retirement plan
- Sources of guaranteed income in retirement
How about non-financial factors?
Health is one of the leading drivers of satisfaction, along with independence, a strong social network and a feeling of preparedness. Married people generally report more social interaction and better financial situations.
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
Related content
-
4 Great Tools to DIY Your Own Financial PlanSmart Savings Several tools picked out by Kiplinger that DIYers can use to make their own financial plan.
-
The 7-Month Deadline That Sets Your Lifetime Medicare PremiumsUnderstanding Medicare enrollment is crucial, as missing deadlines can lead to permanent late enrollment penalties and gaps in coverage.
-
Retirees Living in Portugal: You Need a Post-NHR Tax StrategyWhen your 10-year Non-Habitual Resident tax break ends, you could see your tax rate soar. Take steps to plan for this change well before the NHR window closes.
-
4 Great Tools to DIY Your Own Financial Plan
Smart Savings Several tools picked out by Kiplinger that DIYers can use to make their own financial plan.
-
The 7-Month Deadline That Determines Your Lifetime Medicare Premiums
Understanding Medicare enrollment is crucial, as missing deadlines can lead to permanent late enrollment penalties and gaps in coverage.
-
If You're a U.S. Retiree Living in Portugal, Your Tax Plan Needs a Post-NHR Strategy ASAP
When your 10-year Non-Habitual Resident tax break ends, you could see your tax rate soar. Take steps to plan for this change well before the NHR window closes.
-
Could Target-Date Funds With Built-In Income Guarantees Be the Next Evolution in Retirement Planning?With target-date funds falling short on income certainty, retirement plans should integrate guaranteed income solutions. Here is what participants can do.
-
Should You Renew Your CD?With rate cuts impacting earnings, we examine if now is a wise time to renew CDs.
-
7 Ways to Plan Now to Save on Medicare IRMAA Surcharges LaterUnderstand the critical two-year lookback period and why aggressive planning before you enroll in Medicare is the most effective way to minimize IRMAA.
-
Where to Store Your Cash in 2026Set yourself up for success with these strategies.
-
The 'Best of Both Worlds' Rule of Retirement SpendingIt's the 4% rule on steroids. Here's what it is and why it may work for you.
