Nearly 1 in 3 retirees (31%) say they are spending more than they can afford in 2024—and that’s up from just 17% saying the same in 2020.
This according to the third Spending in Retirement study from the Employee Benefits Research Institute, fielded during the summer of 2024, which surveyed approximately 3,600 American retirees between the ages of 62 and 75. It is meant to assess how retiree spending patterns and well-being have changed since their retirement.
When the first study was done in 2020, only 17% said their spending is much higher or a little higher than they could afford. The second survey in 2022 found 27% were doing so, and in the survey released Nov. 7 via an EBRI Issue Brief, it was up to 31%.
Given their economic circumstances during retirement, half of the retirees in the 2024 survey said they saved less than what was needed for retirement. One in three said they saved the right amount, and 17% said they saved more than what was needed.
More key findings from the survey:
- Early retirement: Among the 58% who retired earlier than expected, the most common reasons for retiring were having a health problem or disability (38%) and changes at their company, such as downsizing, closure, or reorganization (23%).
- Credit card debt: The prevalence of outstanding credit card debt increased substantially compared with 2022 and 2020. In 2024, 68% of retirees reported having outstanding credit card debt, compared with 40% in 2022 and 43% in 2020.
- IRAs and 401(k)s: Individual retirement accounts (IRAs) were noted as being a current income source for 20% of retirees, while 401(k)-like workplace retirement plans were an income source for 17% of retirees. The median share of income generated by these accounts was 10% for IRAs and 15% for 401(k)-like accounts.
- Consumption philosophy: Retirees were asked to rate their consumption philosophy on a scale of 1-10, where 1 is “I have a savings mindset” and 10 is “I have a spending mindset.” While half (51%) were relatively neutral, rating themselves as a 4, 5, 6, or 7, about 38% said they have a “savings mindset” with a rating of 1, 2, or 3. On the other end of the spectrum, just 11% said they had a “spending mindset” with a self-reported rating of 8, 9, or 10.
- Emergency savings: Overall, 59% of retirees said they have three months of emergency savings, down from 69% in 2022. Yet, one in three (36%) retirees have experienced unexpected spending needs since their retirement.
- Well-being: In 2024, retirees rated two out of three well-being measures lower than they did in 2020 and 2022. On a scale of 1-10, where 1 is “not at all aligned,” and 10 is “very aligned,” retirees rated lifestyle alignment with preretirement expectations an average of 5.7, down slightly from 6.4 in 2022 and 6.8 in 2020. Similarly, retirees rated their satisfaction with life in retirement an average of 6.9 in 2024, down slightly from 7.0 in 2022 and 7.4 in 2020.
EBRI was able to fund the development of this research thanks to support from EBRI’s Retirement Security Research Center partners: American Funds/Capital Group, Empower, Mercer, Principal Financial Group, Transamerica Retirement Services, BlackRock, J.P. Morgan, PGIM, and SS&C Technologies.
EBRI members can download the 29-page report here.
SEE ALSO:
• EBRI Finds ‘Substantial Growth’ in Retirement Plan Ownership, Assets
• 9 Key Findings from EBRI’s 2024 Retirement Confidence Survey
Veteran financial services industry journalist Brian Anderson joined 401(k) Specialist as Managing Editor in January 2019. He has led editorial content for a variety of well-known properties including Insurance Forums, Life Insurance Selling, National Underwriter Life & Health, and Senior Market Advisor. He has always maintained a focus on providing readers with timely, useful information intended to help them build their business.
