It should come as no surprise that retirees and those planning their retirement are more apprehensive about their golden years than they were five years ago. The recession has spooked everyone financially, including retirees, according to the 2010 New Retirement Mindscape II Study commissioned by Ameriprise Financial. It’s not all bad news though.
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More people are taking action. This pessimism may be the best thing that ever happened to retirement planning. Respondents in the early planning phases of retirement, six to 15 years out, are more likely to be setting aside money for retirement now (80 percent), than when the survey was first conducted in 2005 (72 percent), Ameriprise found.
The financial and emotional toll of the recession seems to have encouraged those even closer to retirement to seek outside help. Over 50 percent of those within five years of retiring are now getting advice from financial advisers, compared to less than a third five years ago. This probably explains why so many more folks expect to feel empowered in retirement than when the survey was first conducted.
Some fears are overblown. In addition to general economic worries, consumers are very concerned about skyrocketing healthcare costs. In the Mindscape survey, health insurance concerns were cited as the most difficult issue facing pre-retirees. But the reality may not be as bad as the fear. After retirement, this concern declines steadily. For those in the survey that have been retired longer than 15 years, only 10 percent describe this as a real problem.
It may not be as bad as we thought. When the Employee Benefits Research Institute (ERBI) published its report on retirement readiness earlier this year, the results appeared very bleak. Nearly half of boomers nearing retirement risk running out of money. But as Steve Utkus points out on the Vanguard blog, a little closer look at the ERBI data shows that it’s not as bad as it looks for the other half. Thirty percent of pre-retirees aren’t that far off and will have at least 80 percent of what they need. They may not be as ready as the other half, but they are close. Granted, that’s still 20 percent of people that are not ready at all, but not nearly as bad as the initial headlines screamed.
It’s not all about the money. The Mindscape study remained pretty consistent between 2005 and 2010 in terms of what retirees’ priorities are. While much of the focus of retirement planning revolves around money, the majority of retirees cite priorities that have little to do with it. The top priorities are still: remaining healthy (82 percent), spending time with family (73 percent), and choosing where to live, what hobbies to pursue, and how to rest and relax. Only 9 percent of retirees prioritize starting a new business or career.
Perhaps the most dramatic shift over the last five years was for those in the first year of retirement. In the 2005 study this phase was called liberation. This was the honeymoon phase of retirement, with most people reporting excitement and positive feelings. In the 2010 study, those in the first year of retirement are not enjoying themselves, most likely due to the recession. They report that this renamed realization phase is the least happy of all the stages of retirement. The good news is that once you make it past that first year, retirement happiness increases. The vast majority of those retired longer than a year (80 percent) report feeling happily retired.
Sydney Lagier is a former certified public accountant. Since retiring in 2008 at the age of 44, she has been writing about the transition from productive member of society to gal of leisure at her blog, Retirement: A Full-Time Job.