Key Findings from 2024 Retirement Survey You Can’t Miss

Identifying retirement sentiment from the Employee Benefit Research Institute and examining the strategies you can use to avoid unnecessary financial strain in retirement.

Today, I’m diving into the latest Retirement Confidence Survey from the Employee Benefit Research Institute (EBRI), which uncovers some surprising trends and offers valuable lessons for your retirement planning.

The Early Retirement Surprise

One of the headline findings from the EBRI survey is that, on average, people expect to retire at age 65 but end up retiring at 62. This three-year gap can be a significant surprise if you’re not prepared. While this trend isn’t new—Boston College’s retirement center reported similar findings back in 2011—it’s a stark reminder that many retire earlier than planned.

Reasons for Early Retirement

The survey reveals that nearly 70% of those who retired earlier than expected did so for reasons beyond their control. These reasons range from health issues and economic changes to family obligations, such as caring for aging parents. This unpredictability underscores the importance of being financially ready for retirement three years ahead of your target retirement date.

Imagine having a meticulously planned retirement schedule set for age 65, only to face an unexpected job loss or health crisis at 62. If your finances aren’t prepared for such an event, it can create unnecessary stress and financial strain. By planning for an earlier retirement, you can navigate these uncertainties with greater confidence and security.

Social Security: A Separate Decision

Another key finding from the survey is the common misconception that retirement and Social Security benefits are intrinsically linked. Many people assume that they should start claiming Social Security as soon as they retire, but this isn’t necessarily the best strategy. The Social Security Administration even reinforces this misconception by linking the term “retirement date” with the start of benefits.

However, the decision to retire and the decision to claim Social Security are separate and should be made independently. Your goal should be to maximize your Social Security benefits by timing them correctly, which often means delaying benefits to increase your monthly payments. You can start the process by creating an account on ssa.gov to explore different scenarios and understand the implications of your choices.

Higher Than Expected Expenses

The survey also highlights that over a third of retirees found their travel, entertainment, or leisure expenses higher than expected. Additionally, half of the retirees reported overall expenses that were greater than they had anticipated. This is particularly common in the first few years of retirement when new retirees often spend more on vacations and home improvements.

To manage this, plan for higher expenses, especially in the early years of retirement. Building a cushion for unexpected costs can prevent financial shortfalls and allow you to enjoy your retirement without constant worry about your budget.

Income Expectations vs. Reality

One of the more startling revelations from the survey is the gap between workers’ expectations and retirees’ realities regarding post-retirement work and pension income. While 75% of workers expect to continue working for pay during retirement, only 30% actually do. Similarly, many workers expect to receive traditional pension benefits, but the reality is that fewer people have access to such plans, particularly younger workers.

This discrepancy highlights the need to plan conservatively for your retirement income. Assume that you might not be able to work as much as you’d like or that your pension benefits might be lower than expected. By setting realistic expectations for your retirement income, you can avoid financial shortfalls.

Key Takeaways for Your Retirement Plan

1. Be Ready Three Years Early: Prepare your retirement plan and investments as if you will retire three years earlier than your target date. This will give you a buffer against unforeseen circumstances and provide peace of mind.
2. Separate Retirement and Social Security Decisions: Treat your decision to retire and your decision to claim Social Security benefits as separate financial events. Focus on maximizing your Social Security benefits rather than taking them as soon as you retire.
3. Expect Higher Expenses: Plan for your retirement expenses to be higher than anticipated, especially in the first few years. This includes factoring in discretionary spending on travel and entertainment as well as unexpected home repairs or medical costs.
4. Adjust Income Expectations: Be conservative in your income projections. Don’t rely too heavily on post-retirement work or pension benefits that may not materialize as expected.

By integrating these insights into your retirement planning, you can create a more resilient and flexible financial strategy. 

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Additional Links:

• 2024 Retirement Confidence Survey – Employee Benefit Research Institute
• “Retire at 65? It’s more like 62.” – The Wall Street Journal
• “Results From the 2024 Retirement Confidence Survey Find Workers’ and Retirees’ Confidence Has Not Recovered From the Significant Drop Seen in 2023, but Majorities Remain Optimistic About Retirement Prospects” – EBRI
• Social Security Administration 

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