Experience is the mother of knowledge, the saying goes. In that case, a great way…
Many retirees’ spending patterns are different than they envisioned in preretirement. Most people retire several years earlier than they expected. A significant percentage of both preretirees and retirees wish they had started saving for retirement earlier and had saved more.
These are some findings in a report recently published by HSBC Wealth Management, entitled The Future of Retirement: Generations and Journeys. The findings are based on a survey of over 1,000 preretirees and retirees in the U.S. and more than 18,000 workers and retirees in 15 foreign countries.
The HSBC survey is one of a series of recurring surveys conducted by various organizations that have useful insights for both retirees and those planning for retirement.
Although preretirees expect some of their major expenses to end in retirement, in fact many retirees continue to have these recurring expenses after retirement. Only 20% of preretirees expect to have credit card debt and 5% expect to have other loan debt in retirement, but many retirees carry these debts into retirement: 40% have credit card debt and 12% have other loan debt. Additionally, 30% of workers expect to be financially supporting others in retirement, but 56% of retirees actually spend on others.
Although 36% of preretirees expect to rely on income from work during retirement, actually only 14% of retirees have such income. Thirty-seven percent of workers expect to depend on pensions or Social Security during retirement, while 51% of retirees rely on these sources to fund their retirement.
Preretirees expect to save for seven years more than current retirees actually did. Part of the reason for this is that most retirees started retirement several years earlier than expected. Preretirees expected to retire at age 64 on average, while retirees actually retired at age 59.
Both preretirees and retirees share a concern for financial security and family security. More than half of workers (55%) and retirees (59%) said family security was one of the things they value most in life, while 57% of preretirees and 68% of retirees highly value financial security. To a lesser extent, both groups value fun and enjoyment in life: 42% of preretirees and 37% of retirees value this highly.There are some differences: 67% of people age 60 or over value financial security, while 48% of people age 25-29 do; 51% of people consider fun and enjoyment in life as important, whereas 33% of people age 60 or over do.
About 15% of preretirees have not started saving for retirement, and 35% of those who started saving either stopped or encountered difficulties. However, preretirees in the U.S. are less likely than those in other countries in the survey not to be saving or to have encountered difficulties.
People tend to view retirement positively the closer they get to it: 86% of those within five years of retirement have positive views, compared to 68% of people age 31 and over (and 68% of retirees). Over 70% of preretirees with children think they will be happy in retirement, and 66% of those without children feel that way.
Most people expect to move at some point in retirement. Fifty-four percent expect to move to a smaller home; 40% expect to move to a retirement home; 30% think they will move to a bigger home; 31% expect to move close to relatives; and 13% plan to move to another country.
Over 20% of workers have never received advice or information about retirement. This includes 27% of preretirees in their 40s and 18% in their 60s. Over half (58%) of preretirees and 50% of retirees have received advice from friends and family; 54% of retirees and 42% of preretirees have received retirement advice from financial professionals.
Thirty-five percent of retirees wish they had started saving earlier, and 31% wish they had saved a larger share of their income.
This video describes six mistakes retirees make to screw up their retirement.