What is a successful retirement? Our research shows that retired workers are faring better than current workers expect to fare (Figure 1), and better than what they had expected themselves.
Of the total population of retirees we surveyed, 85% indicated that their retirement turned out to be as good or better than expected, with 80% saying that their retirement years are more enjoyable than their working years. By contrast, 14% indicated that retirement was worse than expected. We can gain valuable insights into potential drivers of satisfaction by examining the differences between satisfied and unsatisfied retirees.
Financial matters--income, assets, and both current and anticipated expenses--are the primary drivers of retiree satisfaction. Satisfied retirees have more assets, greater incomes, less debt, and fewer concerns about future expenses. Clearly, public policy, plan design, and participant education that encourage early, adequate, and steady savings will go far to mitigate the shortfalls that contribute to retiree dissatisfaction.
Also critical for individuals is their ability to maintain a standard of living in retirement that is similar to their working years.
This affirms our belief that finances play an important role in retiree satisfaction:
Our research shows that retiring in an orderly fashion, when the individual is ready and has saved enough, is much more likely to produce post-retirement satisfaction than when the individual must retire unexpectedly:
While only 15% of respondents report working or looking for work, the reasons for working are telling. For unsatisfied retirees, 70% of those still working report that they are doing so because they need the money compared with only 42% of satisfied retirees. Conversely, 32% of unsatisfied retirees report liking the mental stimulation provided by their current work, whereas 52% of satisfied retirees do.
Our research finds that a 401(k) plan can make the difference between a satisfied retirement and an unsatisfied one. Employees with sufficient retirement savings can retire when they want, work in retirement only if they choose to, and generally enjoy a more satisfactory retirement. The key to success is saving enough--starting early, saving at high enough rates, and staying on track.
T. Rowe Price engaged NMG Consulting to conduct a national study of 3,005 adults aged 21 and older who have never retired and are currently contributing to a 401(k) plan or are eligible to contribute and have a balance of at least $1,000. We also included an oversample of 1,005 adults who have retired with a rollover IRA or left-in-plan 401(k) balance. The online survey was conducted from July 24 to August 14, 2018. This is the fourth in a series of participant surveys, and data from prior surveys is used in this report for comparison purposes. For more information on this and our other extensive research on retirement savings and spending, please contact your T. Rowe Price representative.
1. Agreed "somewhat" or "completely" that "so far, my retirement has turned out to be just as good or better than expected."
2. Agreed "somewhat" or "completely" that "so far, my retirement has turned out to be just as good or better than expected."
3. All types of debt, self or other adult. 51% of satisfied retirees report no debt, versus 43% of unsatisfied retirees
4. Market value of accounts of self and other adults, including traditional or Roth IRAs, 401(k), Roth 401(k), 403(b), 457, profit sharing, or other DC accounts at current or former employers.
Contact your T. Rowe Price representative to find out how we can take your plan to the next level.