December 17, 2024

The Biggest Regrets People Have in Retirement, and Lessons for Future Generations

7 minutes

Episode 311 – There is so much that younger generations can learn from their elders. Not just from the things they got right, but from the things they got wrong. A recent study by the TransAmerica Center for Retirement Studies can help young people figure out some of the things they can do for their own future by avoiding the same mistakes.

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Transcript of Podcast Episode 311

Hello this is Bill Rainaldi, with another edition of Security Mutual’s SML Planning Minute. In today’s episode, what are the biggest regrets people have in retirement, and what can future generations learn from this?

Pretty much everyone has had lasting disappointments to one degree or another, some personal, some financial. Whether it’s words you wish you hadn’t said or the fact that you didn’t buy Nvidia stock when it first came out, we all have something. The best anyone can hope for is that someday you will look back and realize that on an overall scale, your regrets were, as they say, too few to mention.

Like everyone else, retirees have their share of regrets when it comes to finances. Understanding what they’d do differently can be incredibly valuable for younger people. It gives them a chance to avoid making a big decision—or a series of small decisions—that they will regret for the rest of their lives.

With that in mind, a recent survey by the Transamerica Center for Retirement Studies can provide insights to younger people as they begin preparing for their retirement. According to the study, some of the biggest regrets current retirees have are:[1]

They wish they had known more about personal finance. Looking back on their working years, 68 percent of retirees said that wish they had been more knowledgeable about retirement saving and investing. The implication is that if they had been more knowledgeable, they might have made some different decisions along the way.

They think they waited too long to address their financial shortfall. With hindsight, 49 percent of survey respondents believed that they had waited too long to focus on saving and investing for retirement. The report estimates that retirees have a median amount of $71,000 in total household savings, excluding home equity. Approximately 43 percent have less than $100,000 in savings. Only 13 percent have saved $1 million or more.

They believe they’ve had too much debt. Debt is still a significant problem even after retirement. A sizable number of retirees (45 percent) are still paying off debts. These include credit cards (30 percent), mortgages (20 percent), other consumer debt (10 percent). As we’ve discussed before, not all debt is necessarily bad, but having significant credit card debt is almost never a good thing, especially for a retiree.

They wish they had started earlier. As Albert Einstein is alleged to have said, compound interest is “the most powerful force in the universe.”[2] Whether he ever uttered those exact words or not, many retirees understand the value of starting early, albeit after the fact.

They wish they had been more persistent in saving money. A full 76 percent of respondents wish that they would have been better at saving on a more consistent basis. Here’s an example of how consistency pays off. If you save just $5,000 per year starting at age 25, and you earn 8 percent after tax, at age 66 you will have over $1,500,000 in that account alone.

They wish they had gotten more professional advice when they were younger. A full 50 percent of people surveyed said that they would have liked to have received more information and advice from their employer on retirement. Of course, there are other competent sources of professional advice that don’t involve the employer.

Some feel they started collecting Social Security too early. Workers can begin collecting Social Security as early as age 62, or as late as age 70. According to the report, the median age for starting Social Security benefits is 63, with nearly 30 percent starting at 62. Full Retirement Age is 67 for most people. Collecting at 62 means a reduction of 30 percent in monthly benefits. Waiting until age 70 means an increase of 24 percent in monthly benefits. Still, only 4 percent of retirees waited until age 70.

Many would have liked to keep working longer. 58 percent of respondents said that they retired sooner than they had planned, while 26 percent retired when they had planned to. The remaining 6 percent retired later. Among those who retired earlier than planned, the majority did so because of either physical limitations or poor health. Many of the others cited losing their job, organizational changes or unhappiness with the job they had.

There are plenty of lessons for younger generations in these study findings. But for the most part, they reinforce what many people already know. Start saving as soon as possible and keep at it. Minimize credit card debt. Learn the basics of personal finance. Someday you may find that the sacrifice was worth it.

[1] Transamerica Center for Retirement Studies. “Retiree Life in the Post-Pandemic Economy.” transamericainstitute.org. https://www.transamericainstitute.org/docs/research/retirees/retiree-life-post-pandemic-economy-survey-report-2024.pdf?sfvrsn=e99c5ab5_9 (accessed Dec. 5, 2024)

[2] Schleckser, Jim. “Why Einstein Considered Compound Interest the Most Powerful Force in the Universe.” Inc.com. https://www.inc.com/jim-schleckser/why-einstein-considered-compound-interest-most-powerful-force-in-universe.html (accessed Dec. 5, 2024)

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