Retirees Thrive Despite Financial Anxieties Ahead
Even if they retired earlier than preferred, report findings from the Transamerica Center for Retirement Studies show some are happier than ever.
Four in 10 (44%) retirees agreed that their “enjoyment of life” in retirement has improved, and 41% said their happiness has increased since leaving the workforce. About nine in 10 would consider themselves a “generally happy person” (89%).
Rather than working, retirees are choosing to spend their money with family and friends (59%), traveling (44%), and pursuing hobbies (39%).
Yet, while many (66%) have maintained their standard of living throughout retirement, some have declined in health (33%) while 28% fell into financial hardships. As a result, most retirees are taking steps at prevention by seeking medical attention when needed (75%) and getting physical and health screenings (71%).
“Retirement is a major life change. It brings freedom and time for personal pursuits and, unfortunately, it also comes with aging-related health issues and financial constraints,” said Catherine Collinson, CEO and president of Transamerica Institute and TCRS.
While happy, some admit to retiring earlier than they would have liked. Over half (52%) of retirees had to leave the workforce sooner than expected, either due to employment-related issues (47%) or personal health-related concerns (40%). The median age at which retirees considered themselves retired is 62, reported TCRS.
30% have “no plans” to receive long-term care
Retirees are getting by on their savings now, but TCRS warns of potential financial shocks, like emergency or long-term care costs and the impact those could have on retirement balances. According to the findings, as of late 2024, retirees have saved an estimated median of $126,000 in total household savings excluding home equity. One in 10 retirees (12%) have no savings, 25% have saved $1 to less than $100,000, 18% have $100,000 to less than $500,000, 12% have $500,000 to less than $1 million, and 17% have $1 million or more for retirement.
Instead, over half (53%) rely on Social Security benefits to fund their future, compared to 20% who use a company-funded pension plan, 11% who receive income from their retirement plans savings, and 10% who use other savings and investments.
The smaller balances have created financial anxiety for those retirees who know they’ll have limited funds when the times comes to pay for long-term care costs. Forty-one percent list declining health that requires long-term care as one of their greatest retirement fears, 36% are scared of losing their independence, 32% fear cognitive decline/dementia/Alzheimer’s diseases, and 30% are worried over the possible long-term costs of it all. Despite the trepidations, 41% are at least “somewhat confident” they can afford the care, even if it means relying on family and friends as caregivers (of which 47% plan to do). Thirty percent said they have no plans for receiving long-term care.
“One of the most important things retirees can do is plan for long-term care in older age, by starting a dialogue with family and researching the available options and associated costs,” said Collinson. “Especially today, amid the increasing demand for long-term care services and the skyrocketing cost of care, it is far better to proactively plan versus procrastinate until there’s a crisis when emotions are running high and options are limited.”
Additional findings from the TCRS’ “Retirement Realities: The Experience of Retirees” can be found here.
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with nearly a decade of experience and a passion for telling stories and reporting news. She is originally from Queens, New York, but now resides in Denver, Colorado.