Background: Realistic expectations help individuals plan for a financially secure retirement. This week’s Research Minute will take a closer look at the RRC Summit presentation, “Pre-retiree Expectations v. Retiree Reality”, presented by Catherine Collinson, Transamerica Institute.

The RRC Summit, held in late November at BNY Mellon in New York City, brought together a wide variety of speakers, from panels that framed plan sponsor and industry discussions to quick sessions led by academics and researchers. The next Summit will take place on February 29th at Pacific Life in Newport Beach, CA.

Findings: How do the perspectives and expectations of pre-retiree workers differ from the experiences of retired participants when it comes to savings adequacy, retirement age, life expectancy, retirement planning, and Social Security? The Transamerica Institute set out to answer those questions in its latest report. Their findings show that 66% of pre-retirees expect to retire after age 65, while 58% of actual retirees’ retirement age was before age 65.

Source: Life in Retirement: Pre-Retiree Expectations and Retiree Realities, Transamerica Center on Retirement Studies (Sept. 2023), DCIIA RRC

This gap in retirement age has a direct impact on financial strategies related to Social Security claiming (as seen in the chart below), unexpected extra retirement years to fund, and the impact of longevity on retirement security.

Source: Life in Retirement: Pre-Retiree Expectations and Retiree Realities, Transamerica Center on Retirement Studies (Sept. 2023), DCIIA RRC

These findings reveal that the gaps between what workers expect their retirement to look like and their behavior can be addressed. The following solutions could support this:

Expanding access to emergency savings programs and promoting savings Helping workers stay in the workforce longer and retire later

Considering potential longevity and lifespan effects on planning

Innovating financial planning solutions across demographics and the income spectrum

Increasing awareness of Social Security claiming strategies

Bottom line: There is a disparity between the expectations of individuals nearing retirement and the actual realities they encounter in retirement. To bridge this gap, workers can proactively work towards a financially secure retirement by acknowledging potential outcomes and considering factors beyond their immediate control, such as longevity and the duration of their careers.

Next week, we will do one final RRC Summit deep dive on how plan sponsors can help participants better manage spending spikes. Check out more materials from the Summit, a full agenda and list of speakers for the above sessions, and recordings from the event on our RRC member site. You can also join the conversation about insights from the Summit on LinkedIn.