Retirement expectations differ from reality

Each of us has big plans for retirement, but plans often change – and sometimes in ways we don't anticipate.

For example, when Americans were asked how much money they would spend in retirement compared to pre-retirement, a majority replied that they anticipated their retirement spending would be a little lower (32%) or much lower (25%), with another 32% saying that their spending would remain about the same.¹

However, according to people currently in retirement, 50% reported that their spending has actually been higher or about the same as it was before retiring. Many retirees stated that unanticipated health care costs were responsible for this rise in spending.¹

A similar discrepancy between expectations and reality can be seen in the number of retirees working for pay in retirement. Prior to retirement, a wide majority of workers (70%) indicated that they are planning to work for pay after they retire. However, in truth, only 23% of retirees report that they have worked for pay in retirement.² Retirees cite both personal and health reasons why they don't pursue paying jobs after they retire.

What does all this tell us? First, it's not uncommon for changes to occur once you retire. Sometimes you simply can't anticipate how your personal or financial needs might alter as you progress through retirement. You might want to travel more or spend more time with family. You also may have to address urgent health care issues that were unexpected. All this will require you to rethink how you spend both your money and your time.

Second, you should account for the unexpected long before it occurs. This can include starting to save for your retirement earlier, contributing more to your retirement nest egg, drawing up your estate documents sooner rather than later, and making contingency plans.

The ancient philosopher Heraclitus once said that the only constant is change. By saving more and planning now, you give yourself more options down the road and make it easier to adjust to the inevitable changes that retirement will bring.

¹Spending in Retirement: Two Perspectives. Employee Benefit Research Institute Fast Facts. May 26, 2010. From www.ebri.org.

²Working for Pay in Retirement: Expectations vs. Reality. Employee Benefit Research Institute Fast Facts. April 22, 2010. From www.ebri.org.

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