Published on Wednesday, 30 November -0001 00:00
The familiar adage "older and wiser" appears to not apply when it comes to managing money in retirement. A new nationwide Thrivent Financial survey of 800 retired and non-retired Americans ages 60-74 revealed that most are naive about how much money they will need in retirement, and many are off-base with their actual spending in retirement. The survey found that 55 percent of seniors are unsure of how much money they will need to last throughout retirement. The majority (56 percent) are off target for their monthly spending in retirement, with 29 percent spending more and 27 percent spending less than expected. In addition, retirement tends to lead more people to a "do it yourself" mentality in financial planning. Just one in five retirees (22 percent) have worked with a financial advisor during his or her first two years of retirement to discuss spending and drawing down one's savings. Of those who did work with an advisor, however, 95 percent found it valuable. The Thrivent Financial survey set out to measure the attitudes and readiness of Americans as they approach, and live in, retirement. It revealed that despite being at the threshold of retirement-if not already across it-most are without a road map in the form of a financial plan. "This generation has taken a hands-off approach to saving and spending planning when in retirement," said Mark Anema, vice president of accumulation and retirement income solutions for Thrivent Financial. "But the reality is that this generation can't afford to take chances because they often don't have the pension plan or other secure income their parents may have had to ensure they are not destitute in old age. The financial planning process doesn't end at 65." No plan = no worries? Even with the seeming lack of knowledge and preparation, those surveyed revealed a surprisingly carefree attitude toward their financial future. Sixty-one percent don't worry or think about having enough money in retirement and 62 percent are not at all anxious about the performance of their investments. However, their attitudes don't necessarily match up with their actions. While they claim to not be worried about having enough money, two-thirds are taking steps to reduce their spending in retirement, including traveling less (37 percent), giving fewer or smaller gifts to family members (37 percent), shopping with coupons or at sales more often (35 percent) and eating out less often (32 percent). Anecdotally, others mentioned cutting down on entertaining, both at home and out of the home with friends, reducing household costs by growing food in the garden and using less electricity and gas, and giving less to charitable organizations as ways they are saving money in retirement. Additionally, of those that are not yet retired, nearly one-third (32 percent) had hoped to be at this point. "Retirement should be a time to take advantage of everything life has to offer," said Anema. "While it's good to see that they aren't overly stressed by financial matters, the fact is that some may have a false sense of confidence in the longevity of their savings, while others may be pinching pennies when they could be spending more time or money on the activities they enjoy." Phase two of the retirement journey-spending. While simply reaching retirement often feels like the destination, the reality is that the journey is just beginning. With the arrival of retirement comes the shift from saving for retirement to spending in retirement. While one might assume this to be the easy side of the equation, the survey shows that is not the case. In fact, of those that are retired, the majority have miscalculated their monthly spending in retirement, with 29 percent spending more and 27 percent spending less than expected. "It's understandable that most people overlook the importance of the second phase of retirement planning and naturally assume that they will be able to manage their income in retirement," said Anema. "But, with unknown factors like market performance, life expectancy, health issues or changing personal needs and wants, a holistic plan for dspending in retirement can help ensure that retirees are living their retirement vision to the fullest." About the survey - Data for this survey were collected via telephone interviews by the Discovery Research Group on behalf of Action Marketing Research. Discovery was responsible for collection of the data only. Action Marketing Research was responsible for the survey design and was solely responsible for data weighting and analysis. Interviewing took place between Dec. 1 and 13, 2007, among a nationwide cross section of 800 U.S. adults age 60 to 74 of whom 397 were men and 403 were women. Sixty-four percent of respondents indicated that they are retired, 16 percent identified themselves as partly retired and 20 percent considered themselves not retired.