Retirement regrets, they have more than a few.
According to results from the 2022 Retiree Reflections Survey published this week by the Employee Benefit Research Institute, 70% of retirees would advise changing savings habits by saving or investing more or earlier. Retirees also seemed to fare better when they relied on the guidance of a financial adviser, the study concluded.
“What really stood out, especially in the survey’s open-ended responses, was how much retirees wished they’d focused more, earlier, on retirement savings and refrained from discretionary spending, and spending that involved friends, spouses and even their children’s college education,” said Bridget Bearden, research and development strategist at EBRI.
The EBRI study also found that many retirees don’t have a formal financial plan for retirement. Only 4 in 10 retirees surveyed had both identified financial goals in retirement and developed a written financial plan.
Furthermore, approximately 9 in 10 retirees who used a financial advice professional to create a financial plan were satisfied with their financial professional.
“People tend to discount the future in favor of present satisfaction. We see it all the time, and it translates into forgoing savings and investing to afford a more lavish current lifestyle,” said Michael Cordano, an investment adviser at Jackson Square Capital. “Compound interest and returns are so powerful, and I think when retirees are at the time of life when they start to tap into retirement savings, it can be a stark awakening as to how much an account would be worth had an individual started saving and investing more decades ago.”
The survey of 1,109 American retirees between the ages of 55 and 80 with at least $50,000 in financial assets, which was conducted this spring, confirms many of the conclusions found in the 2022 Retirement Risk Readiness Study from Allianz Life Insurance Co. of North America released earlier this week.
According to the Allianz study, those working with a financial professional feel more prepared in terms of saving enough in a retirement account (74%) compared with those who have never spoken with an adviser (51%). The Allianz results also demonstrated that savers consulting an adviser are more likely to find a balance between saving for retirement and spending to enjoy life now (67%) versus those going it alone (47%).
“Many Americans realize — unfortunately when it’s too late — that they should have and could have done more in their working years to prepare for a stress-free retirement. With medical costs rising and retirees living longer, this realization has become even more profound,” said TJ Arcuri, retirement plan consultant at SageView Advisors. “As a result, we’re seeing more retirees going back to work in either a part-time or full-time capacity to make up the difference of what they have and what they need for the long term.”
“In addition to resisting instant gratification, the lesson continues to be clear and simple — save early, save aggressively, and invest appropriately based on your age, risk tolerance and time horizon,” Arcuri said.