Consumer Payment Card News

Retirement Freedom and Stress-Free Are Not Synonymous

More than half of Americans associate retirement with the words “freedom” and “enjoyment,” and a sizable portion associate retirement with the word “stress-free.” However, the reality is many are forced, out of necessity, to work during retirement, are deeply worried about their future Social Security & Medicare benefits, rising costs of medications, and other unforeseen expenses.

Retirement Freedom

A new survey of Baby Boomers, Generation X, and Millennials found 86% of workers cite positive word associations with “retirement,” compared with only 37% who cite negative words. More than half 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.

Working Plans

The Transamerica Center for Retirement Studies (TCRS) found 44% of workers envision a phased transition into retirement during which they will reduce work hours with more leisure time to enjoy life, or work in a different capacity that is less demanding and/or brings greater personal satisfaction. About 22% plan to continue working as long as possible until they cannot work anymore. The most often cited retirement dreams are traveling , spending more time with family and friends, and pursuing hobbies. Thirty percent of workers dream of doing some form of paid work such as pursuing an encore career, starting a business, and/or continuing to work in the same field. Twenty-six percent dream of doing volunteer work.

Savings Plan

The TCRS study also discovered many are not saving enough for retirement. Workers have saved $50,000 in all household retirement accounts. Baby Boomers have saved $152,000, Generation X has saved $66,000 and Millennials have saved $23,000. Eleven percent of workers do not have any household retirement savings. However, a little less than a third 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 are less likely to have done so compared with Generation X and Millennials.

Debt Plans

Not surprising emergency savings are alarmingly low. Workers have saved only $5,000 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. More than three-quarters of workers are concerned about Social Security.

Additionally, household debt is pervasive across generations. The majority 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%).

According to a report by CreditCards.com, a credit card agency, 37% lie awake fretting about saving enough for retirement, 34% because of educational expenses, 26% over mortgage/rent bills and 22% due to credit card debt. Gen Xers are the most concerned about health care expenditures and saving for retirement. Millennials are the most fearful about outlays for education, housing and credit card debt. These issues are cutting into the slumbers of 73% of Gen Xers, 71% of millennials, 59% of Baby Boomers and 48% of the Silent Generation.