Retirement represents a major life transition filled with both exciting opportunities and significant challenges.
The freedom to finally pursue personal interests comes hand-in-hand with the reality of managing limited financial resources.
Recently, the Transamerica Center for Retirement Studies released their 24th Annual Retirement Survey examining how retirees are faring in today's post-pandemic economy.
The comprehensive report provides a fascinating window into the lives of American retirees - their financial situations, living arrangements, health concerns, and plans for the future.
But, it's long and data intensive. That's why we've summarized it below.
Let's dive into what they discovered and what it means for both current and future retirees.
The Changing Retirement Landscape
Today's retirees have lived through major shifts in how retirement works in America. During their working years, they witnessed:
A transition from employer-funded pension plans to employee-funded 401(k) plans
Growing expectations for workers to self-fund more of their retirement
Increasing concerns about Social Security's long-term funding
The economic impacts of a global pandemic
These changes have created a complex environment where retirees must navigate financial challenges while trying to enjoy their retirement years.
The survey, which gathered responses from 2,404 American retirees, offers valuable insights into how they're managing.
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Retirement Perceptions: The Good and the Bad
When asked about retirement, retirees overwhelmingly associated positive words with their experience:
86% selected positive associations like "freedom" (68%), "enjoyment" (58%), and "stress-free" (41%)
Only 37% chose negative words, with "health decline" (21%) and "financial insecurity" (18%) being the most common
This reveals that despite challenges, most retirees view this stage of life positively. Their top priorities reflect this optimistic outlook, with "enjoying life" (70%) and "being healthy and fit" (67%) at the top of their lists.
The Financial Reality for Today's Retirees
While attitudes toward retirement are generally positive, the financial picture is more complex:
Retirement Income Sources
Social Security dominates as the primary income source for retirees:
91% receive some Social Security income
For 58%, Social Security is their primary income source
Only 20% rely primarily on personal savings
Just 18% count on a pension as their main income
The median age for starting Social Security benefits is 63, with nearly a third (29%) claiming benefits at the earliest possible age of 62 - despite the permanent reduction in benefits this creates. Only 4% waited until age 70 to maximize their benefits.
Household Income and Savings
The survey found that the median annual household income for retirees is $55,000, with significant disparities:
36% of retirees have household incomes below $50,000
32% fall between $50,000 and $100,000
20% earn between $100,000 and $200,000
Only 8% have incomes above $200,000
Total savings also show concerning gaps:
The median total household savings (excluding home equity) is $71,000
14% have no retirement savings at all
29% have less than $100,000 saved
Only 22% have saved more than $500,000
For emergency funds, the picture is also worrying:
Median emergency savings amount to $10,000
17% have no emergency savings
31% aren't sure how much they have saved for emergencies
Debt Among Retirees
Many retirees are still dealing with debt:
48% have non-mortgage debt averaging about $5,000
30% still have mortgage debt with a median amount of $68,000
These financial realities help explain why 30% of retirees report having trouble making ends meet, despite 70% expressing confidence they'll maintain a comfortable lifestyle throughout retirement.
How Retirement Happens
One of the most interesting findings is that retirement often doesn't happen as planned:
58% of retirees retired sooner than they expected
Only 36% retired when planned
6% retired later than planned
Among those who retired early, the reasons are revealing:
46% cited health issues
43% pointed to employment-related reasons like job loss or organizational changes
Only 21% retired early because they could financially afford to
For the small group who worked longer than planned, 68% did so for financial reasons, while 55% continued working to stay active and mentally sharp.
Most retirees (42%) stopped working immediately upon retirement, with only 16% transitioning gradually through reduced hours or less demanding roles.
Housing and Living Arrangements
Where and how retirees live provides important context for understanding retirement:
62% stayed in the same home after retiring
38% moved to a new home after retirement
For those who moved, the top reasons included:
Moving closer to family and friends (36%)
Downsizing to a smaller home (33%)
Reducing expenses (26%)
Starting a new chapter in life (24%)
When choosing where to live, retirees prioritize:
Affordable cost of living (65%)
Proximity to family and friends (61%)
Access to healthcare (49%)
Low crime rates (48%)
Homeownership is common among retirees, with 73% owning their homes, while 23% rent, and 3% live with relatives or friends.
Health and Wellbeing in Retirement
Health concerns are significant for retirees:
73% are concerned about their health in older age
37% fear declining health that requires long-term care
28% worry about cognitive decline or dementia
Most retirees report taking care of their health by:
Seeking medical attention when needed (75%)
Getting routine physicals and screenings (71%)
Socializing with family and friends (64%)
Getting recommended vaccinations (64%)
However, fewer focus on important aspects like:
Managing stress (39%)
Spending time in nature (35%)
Considering long-term health when making lifestyle decisions (19%)
Seeking mental health support when needed (13%)
While 94% have health insurance (including Medicare or Medicaid), only 13% have long-term care insurance, despite 26% fearing long-term care costs.
Planning for the Long Term
Retirees are planning for long lives, with a median expected age of 90, meaning a typical retirement period of 29 years. Despite this long horizon:
Only 19% have a written financial plan for retirement
44% have an unwritten plan
37% have no financial plan at all
When it comes to long-term care, many retirees haven't fully prepared:
48% plan to rely on family members or friends for care
25% would use a professional in-home caregiver
25% would move to an assisted living community
29% have no plans for long-term care
Legal preparation shows similar gaps:
52% have a will
43% have a medical power of attorney
41% have an advance directive or living will
28% have no legal documents in place at all
Insights for Future Retirees
One of the most valuable aspects of the survey is the wisdom current retirees offer to younger generations:
76% wish they had saved more consistently
68% wish they had been more knowledgeable about retirement saving and investing
50% wanted more information and advice from their employers
49% said debt interfered with their ability to save for retirement
49% admitted they waited too long to focus on retirement saving
Their outlook for future retirees is sobering, with 55% believing future generations will be worse off in retirement than current retirees. Only 7% think future retirees will be better off.
Retirees' Policy Priorities
When asked what government policies would help improve retirement security, retirees prioritized:
Addressing Social Security funding issues (82%)
Addressing Medicare funding shortfalls (71%)
Making healthcare and prescription drugs more affordable (64%)
Ensuring all workers can save for retirement in the workplace (50%)
Making long-term care services more affordable (45%)
What This Means for You
Whether you're already retired or still planning for that future, this research offers important takeaways:
For Current Retirees:
Create a written financial plan to help ensure your savings last your lifetime. Only 19% of retirees have one, but it's crucial for long-term security.
Consider delaying Social Security if possible. With a median retirement span of 29 years, maximizing this guaranteed income source is valuable.
Address potential long-term care needs before a crisis. With 73% concerned about health in older age but only 13% having long-term care insurance, this represents a significant planning gap.
Establish legal documents like wills, advance directives, and powers of attorney. The 28% of retirees without any legal documents are risking complications for themselves and their families.
Focus on both physical AND mental health. While most retirees attend to physical health needs, far fewer prioritize mental health support or stress management.
For Future Retirees:
Save consistently and start early. The top regret of current retirees (76%) is not saving more consistently.
Educate yourself about retirement planning. With 68% of retirees wishing they knew more, investing time in financial education is clearly worthwhile.
Manage debt strategically. Since 49% of retirees said debt interfered with their retirement saving, creating a debt management plan is essential.
Consider a phased retirement approach. Only 16% of retirees transitioned gradually, but this approach can provide financial and psychological benefits.
Be prepared for earlier-than-expected retirement. With 58% retiring sooner than planned, having contingency plans is crucial.
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How can I reduce taxes in retirement? Identify tax strategies including Roth conversions, RMD management, charitable giving and more...
The Big Picture
The Transamerica survey paints a portrait of retirees who are generally enjoying retirement despite financial limitations and concerns. The freedom and enjoyment that come with retirement are real, but so are the challenges of stretching limited resources across decades of life.
For many retirees, Social Security serves as the financial backbone of retirement, with personal savings playing a supporting role. This highlights the critical importance of protecting this program for current and future retirees.
The frequent gap between retirement plans and reality - with most retirees leaving the workforce earlier than expected - underscores the importance of flexible planning and early saving. Health issues, job changes, and other unexpected events often accelerate retirement timing, making early financial preparation even more crucial.
Perhaps the most valuable insight comes from what current retirees wish they had done differently: save more consistently, learn more about investing, and manage debt better. These straightforward pieces of advice represent practical steps everyone can take to improve their retirement prospects.
As the retirement landscape continues to evolve, incorporating these lessons from today's retirees can help future generations navigate their own paths to a secure and fulfilling retirement, even amid economic uncertainty.
Final Thoughts
Retirement is ultimately a deeply personal journey. Each retiree faces unique circumstances, challenges, and opportunities. What unites them is the need to balance financial realities with quality of life goals over an extended period.
The insights from this survey provide valuable guideposts for that journey, highlighting both common challenges and potential solutions. By learning from the experiences of today's retirees, we can all make more informed decisions about our own retirement planning, whether that retirement is decades away or just around the corner.
The most encouraging finding may be that despite financial constraints and concerns about the future, the vast majority of retirees associate retirement with positive concepts like freedom and enjoyment. This suggests that while financial security is important, the non-financial aspects of retirement - time freedom, personal pursuits, and relationships - contribute significantly to retirement satisfaction.
By preparing thoughtfully for both the financial and non-financial dimensions of retirement, we can increase our chances of joining the 86% of retirees who view this life stage positively - as a time of freedom, fulfillment, and new opportunities.
About the author:
Financial Advisor
Megan Waters is a CERTIFIED FINANCIAL PLANNER™ professional and Financial Advisor at Covenant Wealth Advisors. Megan has over 14 years of experience in the financial services industry. Raised in Williamsburg, VA, Megan graduated from the Honors College at the College of Charleston with a BS in Economics and a minor in Environmental Studies.
Disclosures: Covenant Wealth Advisors is a registered investment advisor with offices in Richmond, Reston, and Williamsburg, VA. Registration of an investment advisor does not imply a certain level of skill or training. Past performance is no guarantee of future returns. Investing involves risk and possible loss of principal capital. The views and opinions expressed in this content are as of the date of the posting, are subject to change based on market and other conditions. This content contains certain statements that may be deemed forward-looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected. Please note that nothing in this content should be construed as an offer to sell or the solicitation of an offer to purchase an interest in any security or separate account. Nothing is intended to be, and you should not consider anything to be, investment, accounting, tax, or legal advice. If you would like accounting, tax, or legal advice, you should consult with your own accountants or attorneys regarding your individual circumstances and needs. This article was written and edited by a CERTIFIED FINANCIAL PLANNER™ professional with the assistance of AI. This blog summarizes data from TransAmerica's Center for Retirement Studies 24th annual retirement survey. No advice may be rendered by Covenant Wealth Advisors unless a client service agreement is in place. Hypothetical examples are fictitious and are only used to illustrate a specific point of view. Diversification does not guarantee against risk of loss. While this guide attempts to be as comprehensive as possible but no article can cover all aspects of retirement planning. Be sure to consult an advisor for comprehensive advice.