Survey: 70% of retirees regret not saving, investing more; half had no financial plan

About 70% of current retires wished they had saved more or invested more earlier, according to a recent retirement survey by the Employee Benefit EBRI Research Institute (EBRI). About half (53%) said they did not have a written financial plan or a strategy.

EBRI’s “Retireee Reflections Survey,” conducted this spring among 1,109 American retirees between the ages of 55 and 80 with at least $50,000 in financial assets, also found that retirees believed they fared better when working with a financial advisor and/or having a financial plan.

Bridget Bearden, EBRI’s research and development strategist, said during a recent webinar that the survey sought to understand various issues affecting retirees and their retirement, including:

• Use of a financial plan in retirement
• Financial advisor use/assistance
• Priorities in retirement
• Spending concerns during retirement
• Financial worries before and after retirement
• Retiree reflections upon past financial decisions

The survey, conducted by EBRI in collaboration with Edelman Financial Engines asked retirees about some of the lessons learned from their past financial decisions.

Key survey findings

One of the major findings of the survey is that current retirees wish they’d saved more money and that they had started to plan earlier for retirement than they did, Bearden said. For example, in an open-ended, question-and-answer format, when retirees were asked to detail what pieces of financial advice they would give to their younger selves, 70% said they would advise changing their savings habits by saving or investing more, or by saving earlier than they had done.

Some participants said they would have bought stocks instead of buying trendy clothes or shoes.

When asked what they would have changed before retirement, some participants said they would have bought stocks instead of buying trendy clothes or shoes, and some said they would have invested in the stock market instead of wasting money on frivolous purchases. Some also said they would have saved less for their children’s college education and more for retirement.

But not all reflections were about mistakes, Bearden pointed out. Forty percent of participants said they would not have changed their past financial habits. And what did they think they did right? They took advantage of their employer’s work-related savings plans and saved in their 401(k) or other matching plans, and some said they did start an Individual Retirement Account.

Benefits of using a financial advisor

Retirees also said they seemed to fare better when they worked with a financial advisor, Bearden pointed out. Retirees working with an advisor said that their relationship started long before they retired.

Relative to their transition to retirement, retirees who worked with an advisor on their financial plan reported that the primary benefits they gained were related to asset allocation, Bearden added. These include assistance in identifying their risk tolerance and help in understanding how to turn their retirement savings into an income stream.

Although four out of five retirees have identified their financial goals for retirement, half (53%) do not have a written financial plan or a strategy, according to the survey. And among the 45% of those with a financial plan, the majority worked with a financial professional.

Some of the reasons retirees gave for not identifying financial goals in retirement are:

• Lack of knowledge
• No perceived need
• Procrastination
• Occurrence of unexpected events that competed with their priorities

Top worries

In exploring the top concerns of participants, the study found that five years before they retired, savings and medical expenses were the top financial concerns of participants. These were followed by health-care expenses and inflation.

While retired, inflation was the most frequently cited financial concern, identified by more than half (54 percent) of current retirees, Bearden said. Among the comments they made in relation to inflation:

• Inflation is out of control.
• Inflation is eating away at my income.
• Prices have increased but my income is stagnant.

In addition to inflation, one out of three retirees remains concerned about health- or medical-related expenses, running out of money, and stock-market volatility.

The Retiree Reflections Survey was fielded from April 26, 2022, to May 8, 2022. Survey participants were 55 to 80-year-old retirees who had $50,000 to $5,000,000 in financial assets. One-quarter of the sample surveyed had Covid-era retirement, and about 40% had retired from a large corporation.

Bearden pointed out that the period in which the survey was fielded was marked by high market volatility, rising inflation, a war in Eastern Europe, and continued political polarization.

Ayo Mseka has more than 30 years of experience reporting on the financial-services industry. She formerly served as Editor-In-Chief of NAIFA’s Advisor Today magazine. Contact her at [email protected].    

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Ayo Mseka has more than 30 years of experience reporting on the financial services industry. She formerly served as editor-in-chief of NAIFA’s Advisor Today magazine. Contact her at [email protected].