Hello everybody, I wanted to share with you some new research on retirement,
and the reason for that is because one way of helping us figure
out how comfortable and how satisfied how happy you might be in retirement
is to look at today's retirees and see what they're experiencing and see
what we can learn from those who have gone before you.
So this is a Gallup poll, and it's some nice work by Megan
Brenan, shout out to her. We're going to just go over the results
of this, you can see some of her highlights right here,
but we're going to get right into the data. So one of them
is about how much money will you have? Will you be comfortable in
retirement? And they look at people on the green line, these are pre
retirees or folks who are still working and they say, Do you think
you will be living comfortably in retirement when it comes to your finances?
Versus the blue line is people who are actually retired, so they can
tell you if they actually are living comfortably or not, and what you
can see is that, maybe understandably, there's a lot of press out there
where people who are not yet retired are quite concerned and only about
53% of people as of the last reading think they will have enough
money in retirement. The reality for 80% of people is that they are
comfortable in retirement. So a couple of things could explain that.
One is just maybe having some anxiety about your upcoming retirement.
You might want to assume the worst and expect the best,
and once you are retired, you find out that it's actually okay.
Another thing could be that people just make do with what they end
up having. So maybe they don't have the ideal retirement, but you tend
to adapt to what you have, and maybe that accounts for about 80%
of people feeling this satisfaction. Now, let's acknowledge that not everybody's
working with the same resources, so your comfort and your satisfaction could
depend on your income. That's just one kind of proxy for how wealthy
you are, how fortunate you are. So for those households that have less
than 40,000 a year of income, only one third expect to be comfortable
in retirement versus those with 100,000 or more of household income.
That's relatively high, when you look at the US statistics across the country.
Next, let's go down to where these sources of income are coming from,
and this one is pretty interesting. So if you ask people where do
you think your income will come from versus where is it actually coming
from, so again, we've got the non retires, this is the question,
where do you think your income is going to come from?
The retirees actually know where their income is coming from. And this one's
kind of surprising. First we look at the retirement accounts: Non retirees
think that a lot of income is going to come from a 401k,
an IRA, 403B, those types of accounts. 50%
of people think that's the major source of income, when it turns out
that when people retire, it's only for about 35% of people that...
Have this as a major source of income. This could be from several
factors. One of them might be generational, so you could have people who
are on pensions because their employer pays them a decent
retirement income, and a lot of people in the younger generations are not
going to have that type of benefit. Another thing could be that people
are kind of surprised at how much they get from Social Security.
We'll talk about that in a second, and the other thing might be
just that people aren't withdrawing as much as they might have expected.
They're not supplementing their income with those IRA and 401K withdrawals
to the extent that they thought they might... I mentioned Social Security
as an interesting one, and people tend to be quite pessimistic about Social
Security. So if you ask those pre retirees: How much of your income
do you think you'll get from Social Security? People tend to think that
it's a minor source or even not a source at all,
but if we look at actual retirees, you see that over half of
all those people have it as a major source of income,
and only 10% say that it's not a source at all.
So again, this could be generational, where people are looking at some of
those negative headlines and saying It's not going to be there,
or it's going to get cut or something like that. And by the
way, I would view those with a bit of skepticism, but the point
is that people tend to be quite pessimistic on Social Security,
but it ends up providing a pretty healthy income for a lot of
people, and that's a nice bonus. Better to expect less, I suppose,
and end up being pleasantly surprised. A couple of other things here,
your savings and your home equity. Part time work is pretty fascinating
here, there's a big disconnect, so non retirees think that they will be
working in retirement to get a little bit of extra income,
that's a great way to beef up your finances. But
not many people actually do. I'm not sure what the number is,
I'm sure you can do the math. I guess it's 2%,
but really, very few people are working in retirement, or not at all...
Is 85%... What could be behind this? Well, maybe people don't need the
money, so they're not necessarily working, or it could also be that people
just can't work, maybe they have health issues, maybe they're caregiving
for a family member or something like that, so that's important to keep
in mind that if that is part of your retirement plan,
we want to account for the possibility that maybe you won't work in
retirement or maybe there aren't opportunities available for these people,
who knows exactly what that's all about? So
let's move on down to retirement ages. This is always an interesting one.
You ask people when they think they will retire versus when they actually
do. So people tend to think they're going to retire older or later
than they end up retiring. The numbers kind of converged here in the
most recent study, but if you ask people: When are you going to retire?
They said age 64. When did you actually retire? People say age 62,
so it's a couple of years earlier. What's behind this? Well, we know
from some research from the Employee Benefit Research Institute,
that a lot of people retire early just because they might be forced
out of the workforce, there are changes at their workplace, there just aren't
those opportunities, they may have healthcare issues, whether it's themselves
or they're caring for somebody else. So that's what tends to get people
out of the workforce early. There are some people, there's a small group
who get out early because they have the financial means to do so,
so hopefully that's what happens with you and with most people.
But again, we want to look at this and say, Okay,
let's plan for something, but let's also account for the possibility that
you might not be able to keep working. So, I hope you found
this research interesting. If you did, please leave a quick thumbs up,
that's always helpful. Feedback, so I know that I should keep putting out
information like this. Thanks and take care.