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Learning From the Experience of Retirees (Rebroadcast 12-5-23)

Learning From the Experience of Retirees

Al Waller: The U.S. population is growing older and the number of retirees is increasing. Since 2011, on average, 10,000 Baby Boomers have been turning age 65 every day and they will continue to do so through 2029. In its most recent survey of those ages 18 and older, nonprofit Transamerica Institute found that almost one in four individuals are now fully retired.

Joining me today on ClearPath – Your Roadmap to Health & Wealth℠ is Catherine Collinson, founding CEO and president of nonprofit Transamerica Institute® and its Transamerica Center for Retirement Studies to share her team’s survey report on Life in Retirement: Pre-Retiree Expectations and Retiree Realities. On this second part of a three-part series, we’ll be discussing and learning from the experience of retirees.

Before we get started – a reminder that we would love to hear from you and learn what topics you would like us to cover or give us feedback on today’s show. Please drop me or Catherine a note at [email protected].

Catherine, with so many people nearing retirement, what can we learn from those who have already retired?

Catherine Collinson: Al, there’s so much we can learn from retirees!! I’d like to focus our conversation on three main areas: life in retirement, when and how retirement happened, and insights for future generations of retirees.

I should also note that the retirees in our survey are still healthy enough to be taking surveys.

Al Waller: Sounds like an excellent plan. So, tell me, how are retirees faring in retirement? Are they happy?

Catherine Collinson: In short, retirees are doing great. Almost nine in 10 say they’re happy (89%), enjoying life (86%), and have close relationships with family and friends (88%). And more than four in 10 say their happiness (42%) and enjoyment of life (43%) has improved since retiring.

Retirees are keeping busy, too, by spending more time with family and friends (57%), pursing hobbies (40%), travelling (36%), taking care of grandchildren (18%), and doing volunteer work (17%).

All Waller: That’s so good to hear. Admittedly, I’m living my best life in retirement having become part of the ClearPath – Your Roadmap to Health and Wealth team, as well as enjoying travel around the country and abroad. I’m making and reconnecting with friends and family, especially with our first grandchild, Finn. I couldn’t be more grateful.

That said, among my friends and former colleagues, I’ve found the transition into retirement to be less seamless and more than a bit jarring.

Catherine Collinson: Yes, indeed, it certainly can be a jolt. That’s why I’d like to talk about when and how retirement happened for them. Most retirees in the survey did not work until the traditional retirement age of 65. The median age they retired was 62 – and it wasn’t because they won the lottery and could quit their day jobs.

Our survey found almost six in 10 retirees (56%) retired sooner than planned, and it appears that their transition was difficult. Most cited either personal health (45%) or employment-related issues (42%) as their reasons for retiring early. Very few did so due to financial ability (17%).

Al Waller: On our first episode in this three-part series, we talked about pre-retiree expectations versus retiree realities – and we touched on this very point. Given what’s at stake, I’d like to reemphasize this issue. What can we learn from the experience of retirees? And what can those currently in the workforce do to address this risk?

Catherine Collinson: Clearly, the survey findings illustrate the imperative that we protect our health and do everything we can to ensure our continued employability – including keeping our job skills up to date, learning new skills, staying on top of the job market, and networking. The survey findings also underscore the importance of having contingency plans if retirement happens unexpectedly.

Al Waller: Retirement has major financial consequences – and for those retiring sooner than planned, it seems they would be intensified.

Catherine Collinson: You’re right. Retirees are living on a fixed income. Many are afraid of running out of savings – and based on their current savings, their fear is well-founded. Excluding home equity, the household savings among retirees is $73,000 (estimated median).

More than half of all retirees (54%) indicate that Social Security will be their primary source of income throughout their retirement. Among those currently receiving Social Security benefits, the median age at which they started is 63. Thirty-one percent started receiving benefits at age 62, which is the earliest age possible for Social Security retirement benefits — albeit at a 20% to 30% reduced benefit depending on their year of birth and the age they are eligible to receive full retirement benefits. Only four percent of retirees waited until age 70 to receive benefits, the age which is the maximum age and brings increased benefits.

Claiming Social Security early may have been out of necessity for them. However, in my conversations with retirees over the years, many are unaware there are Social Security claiming strategies that can optimize and maximize their benefits – which is another lesson we can learn from them.

Al Waller: Now that they are retired, what can retirees do to improve their financial situation?

Catherine Collinson: I’ll leave you and our listeners with three recommendations.

My first recommendation is to create a well-developed financial plan. Fewer than one in five retirees (19%) have a financial strategy in the form of a written plan. Having a plan can set goals and priorities, it can identify vulnerabilities.

My second recommendation is to plan for the possible need for long-term care. Only 14% of retirees are “very confident” in their ability to afford long-term care. Almost half of retirees (46%) plan to rely on family and friends to provide care, if needed. And three in 10 (31%) have no plans.

My third and final recommendation is to set forth your wishes in writing. Only 51% of retirees have a last will and testament. Even fewer have set forth legal documents such as financial or health care powers of attorney, an advance directive, burial arrangements, or a trust.

Al Waller: Although these are difficult tasks that you’ve just outlined, it’s much better to tackle them in advance versus wait until a crisis. They can make a huge difference in your own life and the lives of your loved ones.

Catherine, where can our listeners find your new survey report, Life in Retirement: Pre-Retiree Expectations and Retiree Realities?

Catherine Collinson: Please visit transamericainstitute.org.

Al Waller: Thanks, Catherine, to you and your team for your research and insights. Listeners, we hope you’ll join us for the other episodes in this three-part series on pre-retiree expectations versus retiree realities. The next and final episode will be on getting ready to retire.

For our listeners, if you have ideas for future episodes, comments, or feedback, please email me or Catherine at [email protected]. Don’t forget to subscribe to our podcast so you don’t miss upcoming episodes.

Until the next time, I’m your host Al Waller. Stay safe, be well, and thanks for listening.

ClearPath – Your Roadmap to Health & Wealth is brought to you by Transamerica Institute, a nonprofit private foundation dedicated to identifying, researching, and educating the public about retirement security and the intersections of health and financial well-being. You can find our weekly podcast on WYPR’s website and mobile app, wherever you get your podcasts, and at transamericainstitute.org/podcast.

ClearPath – Your Roadmap to Health & Wealth is produced by the Transamerica Institute with assistance from WYPR.

The information provided here is for educational purposes only and should not be construed as insurance, securities, ERISA, tax, investment, legal, medical, or financial advice or guidance.

Al Waller is a long-time Baltimore native and employment expert with a 30-year career in leading and advising locally and globally based corporations on matters including: Talent Acquisition and Retention, Employee Relations, Training and Development.
Catherine Collinson is the founding president and CEO of nonprofit Transamerica Institute and its Transamerica Center for Retirement Studies, and she is a champion for Americans who are at risk of not achieving a financially secure retirement. With two decades of retirement industry-related experience, Catherine is a nationally recognized voice on workforce, aging, and retirement trends. She was named a 2018 Influencer in Aging by PBS’ Next Avenue. In 2016, she was honored with a Hero Award from Women’s Institute for a Secure Retirement (WISER) for her tireless efforts in helping improve retirement security among women.