Recently, we wrote about the results of the Retirement Confidence Survey, conducted annually by the Employee Benefit Research Institute. EBRI followed up with a deeper dive into spending trends among retirees with its 2024 Spending in Retirement Survey.
I spoke with Bridget Bearden, research and development strategist with EBRI and author of the study, about its conclusions.
Your survey uncovered several 'concerning trends.' What were they?
We asked retirees how their current life aligns with their pre-retirement expectations and how satisfied they are with life in retirement. In each case, their responses were lower than in 2020 and 2022.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
At the same time, 31% of retirees said their spending was higher than they could afford in 2024, up from 17% in 2020 and 27% in 2022.
What is behind the trends?
Three factors:
- Lack of sufficient savings
- Inflationary pressures
- Rising credit card debt
Half of respondents said they had saved less than what was needed for retirement.
When we asked an open-ended question about why they rated their satisfaction with retired life as they did, inflation was a major reason.
Some typical responses: “Inflation is killing me,” and “Inflation has caused me to tighten up and forgo the things I wanted to do.”
So people have taken on more credit card debt?
Among the 63% of retirees who reported having outstanding debt, 68% had credit card debt. That was up from 43% in 2020 and 40% in 2022.
On a more positive note, only one in 10 respondents described their overall debt load as unmanageable or crushing.
You also asked about emergency savings
Overall, 59% of retirees said they have three months of emergency savings, down from 69% in 2022.
Yet 36% have experienced unexpected spending needs since retiring. The most frequently cited reasons were higher-than-expected housing or healthcare costs.
Number three on the list: children or grandchildren who needed help.
But home equity has risen significantly
Respondents reported an increase of 47% in the median value of real estate equity since the start of retirement. That aligns with the growth in home values during the same period, which was a median of seven years.
At the same time, their newfound real estate wealth did not make them more willing to take risks with their financial assets.
What are their main sources of income?
Retirees in our survey were between the ages of 62 and 75, and 83% reported receiving income from Social Security.
Another 39% said they are receiving guaranteed income through a workplace pension or annuity, with pensions more prevalent among retirees from the public sector.
On the other hand, 20% reported receiving income from an individual retirement account, and IRA income was more common among private-sector retirees.
Are there bright spots in the study?
Retirees who reported more-positive outlooks on spending and well-being cited several factors:
- Longer tenure with their employer
- Fewer employers over a career
- More years participating in a retirement plan
- Sources of guaranteed income in retirement
How about non-financial factors?
Health is one of the leading drivers of satisfaction, along with independence, a strong social network and a feeling of preparedness. Married people generally report more social interaction and better financial situations.
Note: This item first appeared in Kiplinger Personal Finance Magazine, a monthly, trustworthy source of advice and guidance. Subscribe to help you make more money and keep more of the money you make here.
Related content
-
Should You Ditch Your Medicare Advantage Plan? Most People DoIf you want to switch your Medicare Advantage plan or enroll in original Medicare, you're not alone. Here's when it's a good idea and how to go about it.
-
The 401(k) Mistake That Could Cost You Millions in Retirement SavingsThinking about reducing your 401(K) contributions in the current market? Here are six reasons why you may want to reconsider.
-
Should You Ditch Your Medicare Advantage Plan? Most People Do
If you want to switch your Medicare Advantage plan or enroll in original Medicare, you're not alone. Here's when it's a good idea and how to go about it.
-
The 401(k) Mistake That Could Cost You Millions in Retirement Savings
Thinking about reducing your 401(K) contributions in the current market? Here are six reasons why you may want to reconsider.
-
What the HECM? Combine It With a QLAC and See What HappensCombining a reverse mortgage known as a HECM with a QLAC (qualifying longevity annuity contract) can provide longevity protection, tax savings and liquidity for unplanned expenses.
-
I'm an Insurance Expert: Yes, You Need Life Insurance Even if the Kids Are Grown and the House Is Paid OffLife insurance isn't about you. It's about providing for loved ones and covering expenses after you're gone. Here are five key reasons to have it.
-
7 Rules Frequent Flyers Swear ByFrom dodging long lines to avoiding bad coffee, these clever travel rules can help you save time, stay healthy and reduce stress every time you fly.
-
I'm 60 With a $4.2 Million Nest Egg. Can I Stop Saving and Start Spending Until I Retire at 65?Should I continue contributing to my 401(k) or treat myself now?
-
These Jobs Reduce Your Alzheimer's Risk: How You Can BenefitTwo jobs are linked to a lower Alzheimer's risk. Even if you do a different kind of work or are retired, these jobs show how to keep your mind sharp.
-
My Professional Advice: When It Comes to Money, You Do YouThis is how embracing the 'letting others be' and 'learning to surrender' mindsets can improve your relationship with money.
