A survey of retiree spending habits conducted by the Employee Benefits Research Institute (EBRI) finds that just one in three retirees between the ages of 62 and 75 feels that they saved “just right” for post-work life, while half said they had saved less than what was needed.
Spending Habits During Retirement
In an exploration of how “spending patterns and retirement well-being have changed” for 3,600 retirees aged 62-75, EBRI’s Bridget Bearden points out that 58% had retired earlier than planned, with the most common reasons being health issues or “changes at their company, such as downsizing, closure, or reorganization.” Additional patterns harvested from EBRI’s third survey of spending habits during retirement include:
- The prevalence of outstanding credit card debt increased substantially….In 2024, 68 percent of retirees reported having outstanding credit card debt, compared with 40 percent in 2022 and 43 percent in 2020.
- …More retirees (31 percent) said their spending is much higher or a little higher than they can afford in 2024 (up from 27 percent in 2022 and 17 percent in 2020).
- Overall, 59 percent of retirees said they have three months of emergency savings, down from 69 percent in 2022. Yet, one in three (36 percent) retirees have experienced unexpected spending needs since their retirement.
- …Retirees rated lifestyle alignment with preretirement expectations an average of 5.7, down slightly from 6.4 in 2022 and 6.8 in 2020. Similarly, retirees rated their satisfaction with life in retirement an average of 6.9 in 2024, down slightly from 7.0 in 2022 and 7.4 in 2020.
Good To Know–and Do
At Forbes, Jann E. Freed reminds us that as important as financial security is to older age, so too are social connections, and with numerous studies pointing to the dangerous rise of social isolation, it’s wise to understand that developing social capital also requires sustained effort to and through retirement:
Having a support group of friends is our “connection protection” for being strong and resilient.Friendships are relationships and they take time, money, and energy to maintain. Often scarce resources. If we understand the value friendships play in our lives, it’s an investment with great payoffs in terms of happiness and meaningfulness….According to Joseph Coughlin, the Director of the Massachusetts Institute of Technology AgeLab, the focus on financial security for retirement planning is incomplete. He says our real social security “is not an income stream provided by the government, but by our social relationships – our friends.” We worry about the money we think we need to have in order to retire. But Coughlin says we should be considering “the social capital (friends) we will need to remain connected, engaged, to have fun, and to manage the many challenges older age will bring.”
Retirement Success: Plan Sponsors
As many workers face the frightening prospect of needing more but having less, financial experts remind us that employers who sponsor retirement plans can make a big difference toward setting employees up for retirement success. Meaningful steps employers can take to improve retirement outcomes for workers include: access to qualified financial advisors for retirement planning, coupled with tailored strategies for reducing debt and navigating emergencies and achieving other life goals, like buying a home. As Northwestern Mutual leadership reminds us, solid financial planning can make all the difference: “Done well, a comprehensive financial plan can preserve thousands of hard-earned dollars to fund these golden years. For anyone who is not sure how to streamline and preserve every penny, an expert financial advisor can be a great resource.”
Protection For Plan Sponsors
As a sponsor, you make a difference in the lives of employees–and their beneficiaries, but that entails navigating the complexities of ERISA regulations.Unforeseen challenges arise all the time, and seemingly small oversights have been triggering costly lawsuits. The average ERISA claim costs businesses like yours over $1.2 million in legal fees.
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