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
-
Here's How Trump's Tax Bill Could Let Donors Avoid Capital Gains TaxTax Policy As U.S. Senate Republicans mark up their version of the One Big Beautiful Bill Act, one provision could give some donors a major tax break.
-
2025 SALT Cap Could Hurt Top 'Hidden Home Cost'Tax Deductions The latest GOP tax bill might make hidden homeowner costs worse for you. Here’s how.
-
How New Retirees are Navigating Economic Uncertainty‘I Picked a Helluva Time to Retire.’ Six strategies for new retirees facing a dicey stock market and unpredictable economy.
-
Will an AI Robot Take Care of You in Old Age?AI Robots may be just the help older adults and their caretakers need for a host of tasks. Just don't expect it to be a cute little humanoid — yet.
-
This Savings Account Earns You More Than $4,000. Here's HowSee how a jumbo CD can help you reach your savings goals quicker.
-
These Are the Key Tariff Issues to Watch in Coming MonthsWhile they're not dominating headlines right now, tariffs are not over. Some key dates are coming up fast that could upend markets all over again.
-
Technology Unleashes the Power of Year-Round Tax-Loss HarvestingTech advancements have made it possible to continuously monitor and rebalance portfolios, allowing for harvesting losses throughout the year rather than just once a year.
-
The Fiduciary Firewall: An Expert's Five-Step Guide to Honest Financial PlanningArmed with education and awareness, you can avoid unethical people in the financial industry by seeking fee-only fiduciaries and sharing your knowledge with others.
-
What is the IRMAA (Income-Related Monthly Adjustment Amount)?IRMAA is a surcharge added to your Medicare Part B and Medicare Part D prescription drug coverage premiums if your income is above a certain level. Here's what you need to know.
-
What to Know About Treasury Inflation-Protected Securities (TIPS)Understanding what Treasury Inflation-Protected Securities (TIPS) are and how to use them in a portfolio.
