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Expectation Vs. The Reality of Retirement: What Will Retirement Really Look Like?

Expectation Vs. The Reality of Retirement: What Will Retirement Really Look Like?

June 02, 2021

Will your retirement dreams match your reality? For more than 30 years, the Employee Benefit Research Institute (EBRI) has researched this question. The EBRI just conducted their 2021 Retirement Confidence Survey, which gauges the views and attitudes of working-age and retired Americans regarding retirement and their preparations for retirement.1

Their research attempts to ask the most critical question to people who are currently retired: was your retirement what you expected, or was it something else? The survey reveals that workers' views on retirement are misaligned from what retirees say their retirement is really like. 

Survey Highlights

Retirement Funding Differs from Workers' Expectations

Part of the survey takes a deep dive into workers' expectations for sources of income in retirement versus retirees' actual income sources. Only 33% of workers expect Social Security to be a significant source of retirement income. In reality, 62% of retirees say Social Security is a major source of their retirement income.

Further, more than 50% of workers believe that workplace retirement savings plans will be a significant source of retirement income. But the 2021 survey found that workplace plans are a major source of income for only 20% of retirees.

Surprised? We're not. These numbers are consistent year after year. Here's another nugget to consider: 26% of workers plan to work for pay in retirement. In reality, only 7% of retirees do.1

Debt Can Be a Problem for Retirement Planning

4 in 10 workers say that saving for college or paying off debt is negatively impacting their ability to save for retirement. Half of workers say their non-mortgage debt negatively impacts their ability to save for retirement. This trend continues through retirement. More than half of workers and a third of retirees say debt is a problem for their households.1

The Transition to Retirement is Faster Than Expected

Half of workers expect to gradually transition to retirement. Only 19% of retirees report having a gradual transition, while 73% say
their retirement was a full-time stop. In addition, this survey continues to demonstrate that nearly half of retirees retire earlier than they expected — most often because they felt they could afford to, because of a health problem or disability, or because of changes within their organization.1 

Some Don't Know Where to Turn for Advice

Notably, 40% of workers and 20% of retirees say they don’t know who to go to for financial and retirement planning advice. Many turn to non-professional sources, like family and friends (35% of workers and 22% of retirees), or go online to do their own research (35% of workers and 25% of retirees). Only roughly a third of both workers and retirees currently work with a financial professional.1

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The gap in expectations for retirement and reality is clear: retirees generally don't end up working during retirement. Instead, most retirees end up using Social Security as their main source of income, rather than their workplace plans. Additionally, a worker's debt is likely to remain a problem for them once they retire. While these problems could be addressed by an advisor, only a third of workers and retirees work with a financial professional.

For most, retirement is the "next chapter" in life. Your finances must support your retirement vision, so there are no surprises when it's your turn. Let us guide you to your ideal retirement. 

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1. Employee Benefit Research Institute, 2021 Retirement Confidence Survey

Investing involves risks, and investment decisions should be based on your own goals, time horizon, and risk tolerance. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite, LLC, is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information and should not be considered a solicitation for the purchase or sale of any security.