Imagine that you never have to work another day in your life. What would you do? Pursue a passion project? Spend more time with your family? Or get more involved in your community?
Those are just a handful of things recent retirees said they were most interested in pursuing according to Thrivent's 2022 Retirement Readiness Survey.* But 75% of those surveyed also expressed some level of regret about the way they had planned for their retirement. They noted specific things they would have done differently to make the most of their retirement aspirations now that they're living through it and can look back.
Here are five valuable lessons we took from the insights gained from recent retirees that you can apply to your own retirement planning.
1. Dream big
One of the top reflections from retirees in the survey may also be one of the most encouraging: They suggested dreaming big. For many, retirement is about much more than having a certain amount saved. Although money is undoubtedly important, you also want to save with a purpose.
Now is the time to think about the lifestyle you want in retirement and the things that are most important to you. Maybe you want to travel the world, own a lake cabin where your children and grandchildren can enjoy vacations with you, or establish a charitable legacy to help people in your community. Don't be afraid to aim high—an inspiring, personally meaningful vision for your future can motivate you to set and reach your goals.
Our survey found some common themes that retirees noted they highly value. Consider how these may factor into your future and how you can include them in your retirement plan.
- Spending quality time with loved ones
- Not needing to work for financial reasons
- Pursuing new hobbies that were pushed aside in the past
- Being more physically active
- Meeting new people and having time to be more social
2. Set realistic spending expectations
Our survey revealed that 20% of retirees underestimated the amount of money they needed for basic living expenses, and another 17% misjudged the money they'd need for their wishes and wants. When you're unsure about how long you'll need your retirement savings to last for, it can cause financial stress that can impact other areas of your life. That’s why it’s important to set a baseline of what your expenses will be when you retire.
3. Diversify your retirement savings accounts
Don't put all of your eggs in one basket: It's an adage that applies to many aspects of life, but especially to your retirement strategy. Once you have started to set some goals, you can explore the full range of savings options available to you.
Thrivent's survey found that among those nearing retirement, 42% intend to rely on a mix of assets such as a 401(k), personal savings, Social Security benefits and individual retirement accounts (IRAs), compared with just 21% of the younger generations of savers.
Explore your options, diversify your choices, and build your knowledge about common financial assets such as:
- Employer-sponsored retirement plans (i.e., 401(k), 403(b)). While popular among savers, a 401(k) or other type of retirement plan offered through your employer might not be enough, depending on your needs. This could be due to the plans' tax implications and fees, restricted investment options and contribution limits.
- Social Security benefits. Survey findings showed that 21% of retirees wish they'd known more about Social Security benefits before they retired, and 39% of adults are concerned about future potential cutbacks or shortages to the program. Your retirement income plan should ensure you're saving enough to bridge these potential gaps. This includes factoring in the money you'd receive from Social Security—and how it would affect your taxes—as well as the
uncertainty related to the program's health and future.
- Individual retirement accounts (IRAs).
IRAsallow you to invest in stocks, bonds, mutual funds and other options you choose depending on your goals, risk tolerance and timeline. IRAs also offer tax advantages that can benefit you both now and in the future, depending on whether you open a traditional or Roth IRA. You can own both types of IRAs simultaneously but have to abide by the annual contribution limit.
- Annuities. These financial products can be great additions to your retirement income plan, and are among the few investment options that can
guarantee you won't outlive your money.
Even if you’re just starting to think about retirement, understanding how these different financial assets may play a role in your overall savings goals can help you make smart decisions moving forward.
4. Prepare for risks to your retirement savings
Unpredictability is part of life, whether you’re just starting out or moving into retirement. Planning ahead can you help you build more resilience in your financial strategy during uncertain times.
Financial advisors are equipped to help you create a retirement income plan to offset these common risks:
- Taxes. Do you know what your tax liability will be in retirement? The survey found that the most valuable piece of advice people would have given their younger selves would be to learn about
tax implications for their retirement savings.
- Inflation. Amid record-high levels of inflation in 2022, the majority of adults worry about
their ability to saveas well as the health of their retirement plans. Inflation may not have always been top of mind for you, but it's something financial advisors have always factored into retirement planning.
- Health care costs. The costs of increasing health needs in your later years could have serious implications for your savings. Even so, our survey found that only 62% of those nearing retirement have spent serious time thinking about it.
- Outliving your money. People are living in retirement longer than in the past. The survey found that 39% of retirees worried that they didn’t save enough to last for their lifetime.
39% of retirees surveyed worried that they didn't save enough money to last for their lifetime.
5. Update your retirement plan as your life changes
Preparing for retirement is an ongoing process—decades in the making. That's why it's essential to review your goals regularly and tailor them to fit your changing needs as you move through life.
Approach your retirement plan with a firm idea of your wants and needs and a flexible strategy to help you achieve them. For example, the
According to the survey:
- Nearly 40% of retirees cited flexibility as a critical component of retirement planning.
- Another 26% have drawn satisfaction from their ability to be flexible as their situations changed—second only to saving consistently.
The survey also found that younger adults tend to get the most satisfaction from saving consistently, understanding their ideal retirement, and making wise investment decisions.
Partner with a financial advisor
Preparing for retirement is a journey, and having a helpful guide to answer questions, address your fears and be there for you over the long-term can make all the difference. Connect with a