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No one desires to look back on their life with a sense of regret, but for many people who have entered retirement, this has become their reality.
As this year begins, reflecting on the regrets expressed by retirees can provide valuable lessons, particularly for those approaching their own retirement. Insights into their past decisions are crucial for future planning.
“Even though there have been improvements in financial awareness, many retirees still express remorse over their financial preparations for retirement,” stated Suzanne Ricklin, vice president of retirement solutions at Nationwide Financial. “Over 80% of individuals aged 45 and older wish they had taken retirement saving more seriously in their younger years.”
Here are five common regrets among retirees:
According to a recent report by the Transamerica Center for Retirement Studies, fewer than 25% of retirees feel highly confident in their ability to sustain a comfortable lifestyle throughout their retirement years.
The report indicates that the median savings among retirees, excluding home equity, stands at only $71,000. Furthermore, the median home equity is noted to be $114,000, with a significant quarter of retirees lacking any home equity at all.
Additionally, over two-thirds of retirees wish they had saved more consistently throughout their careers. Half of them regret delaying their focus on saving and investing for retirement entirely, according to the study’s findings.
“Many individuals becoming retirees today lack access to the essential knowledge, resources, and support to adequately prepare for retirement,” explained Catherine Collinson, CEO and president of Transamerica Institute.
She emphasized that for individuals whose careers began decades ago, before the widespread adoption of 401(k) plans, retirement planning wasn’t as prevalent or emphasized.
For many women, the challenge lies in having started their saving plans later in life. A study from Corebridge Financial revealed that over 60% of retired women wish they had begun saving for retirement sooner. Alarmingly, only about 25% began their savings within the ages of 18 to 29. Close to 40% of retired women reported not prioritizing financial planning until 41 or later, and 20% admitted they had not yet started saving.
This data emphasizes the critical importance of beginning to save early in one’s career. Terri Fiedler, president of retirement services at Corebridge Financial, noted, “This sentiment emerged clearly from our survey. If they could provide advice to their younger selves, it would be to save early for retirement.”
Additionally, many retirees face the challenge of managing their Social Security benefits. Starting benefits too early can lead to significantly lower monthly payments, a mistake many make. According to the Transamerica report, the median age for receiving Social Security benefits is 63, with nearly 30% of retirees opting to claim at the earliest age of 62. A mere 4% of retirees chose to wait until they were 70 to start claiming benefits.
By delaying Social Security benefits, retirees can enhance their monthly income significantly. For every year they wait past their full retirement age—ranging from 66 to 67—they can earn an approximate 8% increase in benefits annually until reaching age 70, at which point the credits cease to accumulate.
While some individuals have personal reasons to claim benefits early—such as poor health or financial difficulties—psychological factors often play a significant role in the decision-making process.
The Transamerica report indicates that around half of retirees identified debt as a major hurdle in preparing for retirement, with approximately 70% still bearing credit card debt during retirement. This marks an increase from 40% just four years prior. Furthermore, one-third of retirees have expressed that their current spending exceeds their financial capacity, nearly doubling the amount reported in 2020.
Moreover, about one-third of retirees regretted leaving the workforce sooner than desired, a concern highlighted by Olivia Mitchell, a co-author of a paper published in the National Bureau of Economic Research.
The financial advantages of working beyond the conventional retirement age are clear: increased earning potential, maintaining investments, and the opportunity to delay Social Security claims.
However, various factors can catalyze early retirement. More than half of retirees indicated they left their jobs earlier than anticipated due to health issues, disabilities, or company-related changes like layoffs or reorganizations.
While retirees often find joy in their post-career lives, many express regret over their lack of emotional preparation for the transition. Certified financial planner Preston Cherry pointed out that retirees frequently lack clarity about their future plans or personal identities beyond their careers.
Despite these regrets, surveys indicate a general sense of happiness among retirees. More than 40% reported increased life satisfaction post-retirement, spending more time connecting with loved ones and engaging in hobbies than they initially thought possible.
Interestingly, over half of retired women rated their financial health positively, contrasting with just 38% of those still in the workforce. Fiedler noted that this finding shows retired women often feel more secure about their financial situation than their working counterparts.
Retirement planning is uniquely personal; approaches vary widely depending on individual circumstances and goals. “People retire at different ages and for different reasons,” Collinson remarked, emphasizing the need for tailored retirement strategies.
Considering the lessons from retirees, creating a formal financial plan is essential for those still working towards retirement,” Collinson advised, highlighting the importance of budgeting living expenses, debt management, savings, and investment strategies.
Evaluate your asset distribution to ensure it aligns with your financial goals, risk tolerance, and age. It’s also vital to assess sources of guaranteed income, healthcare needs, insurance coverages, and potential long-term care requirements.
Inflation remains a significant concern, as many retirees were taken by surprise by economic changes over the past few years. “While inflation may stabilize, it will always pose potential risks to retirees’ purchasing power,” Collinson cautioned.
Currently, only about 19% of retirees have a documented financial plan, highlighting a gap that needs to be addressed. “Even if you are already retired, it’s not too late to engage in planning to assess your financial status and enhance your situation.”
Kerry Hannon is a Senior Columnist at Yahoo Finance and a recognized career and retirement strategist, having authored 14 books including the popular titles “In Control at 50+: How to Succeed in The New World of Work” and “Never Too Old To Get Rich.”
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