In this era in which people have the potential to live longer than in any other time in history, a time when workers are grappling with how to financially prepare for older age, nonprofit Transamerica Center for Retirement Studies (TCRS) set out to answer the question, “What does ‘retirement’ mean to you?” According to the new study released today, TCRS finds workers most often associate retirement with the words “freedom” (55%), “enjoyment” (53%), and “stress-free” (43%), despite the magnitude of preparations and challenges involved. The survey finds:
- 86% of workers cite positive word associations with “retirement,” compared with only 37% who cite negative words.
- 55% of workers plan to work after they retire, including 41% who plan to work part-time and 14% full time. Among workers planning to work in retirement and/or past age 65, most plan to do so for financial reasons (80%) and almost as many for healthy-aging reasons (72%).
- 44% of workers envision a phased transition into retirement during which they will reduce work hours with more leisure time to enjoy life (27%), or work in a different capacity that is less demanding and/or brings greater personal satisfaction (17%). Another 22% plan to continue working as long as possible until they cannot work anymore.
- The most often cited retirement dreams are traveling (67%), spending more time with family and friends (57%), and pursuing hobbies (48%); 30% dream of doing some form of paid work such as pursuing an encore career, starting a business (13%), and/or continuing to work in the same field (11%); 26% dream of doing volunteer work.
While three in four workers are saving for retirement (75%) through employer-sponsored plans, such as a 401(k) or similar plan, and/or outside the workplace, the survey findings also outline the financial challenges faced by workers:
- Many are not saving enough for retirement. Workers have saved $50,000 (estimated median) in all household retirement accounts. Baby Boomers have saved $152,000, Generation X has saved $66,000 and Millennials have saved $23,000 (estimated medians). 11% of workers do not have any household retirement savings.
- 29% of workers have dipped into retirement accounts by taking a loan, early withdrawal, and/or hardship withdrawal from a 401(k) or similar plan or IRA. Baby Boomers (22%) are less likely to have done so compared with Generation X (32%) and Millennials (30%).
- Household debt is pervasive across generations. The majority (83%) of workers carry some form of debt. The most commonly cited forms include credit card debt (47%), mortgage (43%) and car loan (38%). Millennial workers are more likely to have student loans (25%), compared with Generation X (13%) and Baby Boomers (7%).
Emergency savings are alarmingly low. Workers have saved only $5,000 on average for emergencies and unexpected major financial setbacks. Baby Boomers have saved $10,000, Generation X has saved $5,000, and Millennials have saved $2,000 (medians).
Workers are concerned about Social Security. 77% agree with the statement, “I am concerned that when I am ready to retire, Social Security will not be there for me,” including Generation X (84%), Millennials (80%), and Baby Boomers (65%).