The Employee Benefit Research Institute has published a new
“Fast Facts” report based on the research organization’s Retiree Reflections
Survey, which examined potential barriers to retirement goal setting and
planning as well as regrets related to past financial behavior among retirees
with more than $50,000 in liquid financial assets.
As summarized in the “Fast Facts” report, many of the 1,109
retirees surveyed claimed they would change their past financial behavior to
improve their current living situation. A sizable number wished they started
saving earlier for retirement, EBRI reports, but fully one-third of retirees
did not share in the three most common major financial regrets.
For its analysis, EBRI used two primary data points to flag
retirees as not having major financial regrets. First, retirees had to reply in
the negative when asked this question: “Looking back over your working years,
would you have changed anything about your financial habits to improve your
current financial situation?” Second, the retirees also had to disagree—whether
passively, somewhat or strongly—with this statement: “I wish I started planning
earlier for my retirement.”
As the “Fast Facts” report spells out, 32% of the survey
respondents fall into this category.
“There are some moderate differences in financial behaviors
between retirees with major financial regrets and those without,” the report
notes. “On average, retirees without major financial regrets reported
substantially higher liquid financial assets, with an average of $711,000 (and
a median of $450,000) compared with an average of $434,000 (with a median of
$226,000).”
EBRI’s data show that those retirees who are experiencing
fewer regrets take care to understand and manage their daily expenses. This
group also reported an ease in understanding how to use their retirement
savings effectively.
“Relative to more general demographics, the more notable
differences between those with regrets and those without were related to higher
education and health status,” the report explains. “Specifically, 58% of
retirees without major regrets reported having a college degree or higher as
compared with 48% of retirees with major financial regrets. Similarly, 58% of
retirees without regrets rated their health as a seven or higher as opposed to
44% among retirees with major financial regrets.”
In an open-ended format, EBRI asked all retirees, whether
they had major financial regrets or not, what they felt was the one thing they
did right in their financial preparation for retirement. Half of retirees
reported “saving” or “investing” as the one thing they did right to prepare
financially for retirement.
“In these open-ended responses about saving, many retirees
explicitly highlighted maximizing contributions in an employer-sponsored or
individual retirement account,” the “Fast Facts” report states. “Other
top-of-mind positive financial decisions included working with an adviser, spending
frugally, paying off debt and housing choice.”
Ultimately, the report concludes, the “secret sauce” to a
retirement without major financial regrets comes as no surprise: “It involves
sufficient savings, confidence in understanding how to use those savings in
retirement, and facility in managing daily expenses.”
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