The long and the short of it: retirement is more expensive than most Americans think.
401k participants would be wise to save above and beyond what they anticipate needing, as two in five retirees today are spending more than expected.
Global Atlantic Financial Group discovered as much in a recent survey of over 4,000 Americans ages 40 and older.
Findings were published in its report “Global Atlantic Retirement Spending Study: Perception vs Reality.”
“While the typical non-retired U.S. consumer over the age of 40 spends $2,993 a month, on average, the typical retiree spends 32 percent less ($2,008),” researchers noted.
Data suggest spending less is unlikely a choice but rather a necessity.
When current retirees were asked about retirement planning regrets, the top three included:
- not saving enough (36 percent);
- relying too much on Social Security (20 percent);
- and not paying down debt before retiring (12 percent).
“Many Americans adjust their lifestyles and cut spending once they see how quickly costs can add up in retirement,” Paula Nelson, president of Retirement at Global Atlantic, reiterated.
The good news is over half those who have yet to retire say they take saving seriously. Around 56 percent rank its importance a 9 or 10 on a 10-point scale. They’re striving to generate enough to pay for housing, food transportation and utilities, and two-thirds believe they’re on-track to meet those needs.
However, many foresee challenges, as well. Almost half say planning for retirement is more difficult for them than it was for their parents.
And they’re probably right.
For instance, as researchers noted, the “three-legged stool” (pensions, Social Security, personal savings) that older Americans relied on to fund their Golden Years has been kicked out from under future generations.
“[A]s pensions gradually disappear, personal savings are often insufficient and uncertainty around Social Security grows, these three legs are increasingly seen as inadequate, leaving individuals and their advisors searching for other income sources,” Nelson said.
Jessa Claeys is a writer, editor and graphic designer.
