Retirement Readiness: Bridging Expectations with Reality

As a financial advisor, it is always interesting for me to learn about the general public’s expectations regarding their longest vacation – retirement. There seems to be a persistent gap between people’s expectations of their retirement readiness while they are still working and the reality that they experience once retired.

The Retirement Expectations Gap
In a recently published Axios article, the author highlights this expectations gap using 23 years’ worth polling data published by Gallup on the subject of retirement readiness, asking the same individuals, once while working and again once retired. Their major conclusion? Many retirees may be pleasantly surprised at their ability to live comfortably in retirement.
Source: Axios Article; Gallup Article

While many working-age Americans remain apprehensive about their financial readiness for retirement, most retirees report a more positive reality. For example, 74% of retirees say they are living comfortably, yet less than half of those same retirees, back when they were still in the workforce, believed that they would have enough money saved for retirement.

These findings suggest a considerable disconnect between the anxiety felt during one’s working years and the reality experienced by retirees. The reasons behind this are multifaceted, including the possibility of retirees downsizing, moving to more affordable locations, or finding savings in unexpected areas.

The Role of Social Security and Retirement Savings

Another surprising aspect of this expectations gap is the role Social Security plays in retirement income. Many working-age Americans underestimate how critical this source of income will be for them in retirement. The same Gallup survey revealed that while only 35% of workers expect Social Security to be a major source of their income after retirement, 58% of retirees report it actually is. This underscores the importance of factoring Social Security into your broader retirement plan, even for those who may have some time before their mid-60s.
For more information common myths of the Social Security program, including its longevity, please Click Here.

How to Increase Your Retirement Readiness

Given these realities, it’s important to take proactive steps to increase your retirement readiness:

• Let Us Know! If you are thinking about retirement or wondering how it is achievable, please let us know. As your dedicated advisory team, it is our goal to help you feel confident about your choice to retire on your terms. We can help test your asset longevity and provide you with proactive steps to help you meet your goals.
• Maximize Retirement Workplace Benefits: A pre-retiree’s greatest asset is time and compound interest. Taking full advantage of any retirement plans offered by your employer (e.g., 401(k), 403(b), 457 plan) are excellent savings tools to help you build a retirement nest egg. Additionally, in many cases, employers will match employee contributions up to a percentage as an added employment benefit. If you are unsure whether you are taking full advantage of your workplace retirement plan, please reach out.
• Prepare for Unexpected Costs: Part of the retirement planning process is to include unexpected expenses, particularly healthcare costs, as part of the broader planning conversation. For this reason, it is vital to have a strategy that includes a cash cushion for such surprises.

Final Thoughts
The path to retirement readiness is unique for everyone, and it requires a balance between saving, spending, and planning for the unexpected.

As your advisor, we’ll help you bridge the gap between your retirement expectations and the reality by developing a comprehensive strategy tailored to your specific needs and goals. We do this in a visual format so that you can see what your financial future looks like and ultimately obtain the clarity you need to retire with peace of mind.

Retirement may be a once-in-a-lifetime decision for you, but at ACM we have a unique perspective because we’ve been helping people like you with this decision and what retirement may look for years and continue to do so every day. Together, we can make sure you are prepared for whatever your future holds.

If you have any questions or would like to discuss your retirement goals in more detail, feel free to reach out.

Advisors Capital Management, LLC is an investment advisor registered with the United States Securities and Exchange Commission. Registration does not imply any degree of skill or training. All investing carries risk, including the potential for the loss of principal and past performance is no guarantee of future results. This content is for informational purposes only, can change at any time without notice, and is not investment advice or a recommendation to trade any security. Indices are not available for direct investment. We only provide services in jurisdictions where we are registered. Our disclosure brochure (ADV Part 2A) and customer relationship summary (ADV Part 3) are available at https://adviserinfo.sec.gov and upon request.