A recent study from Fidelity Investments surveyed more than 12,000 people in an effort to separate myth from reality when it comes to retirement. While those surveyed included pre-retirees, retirees and people that don’t plan to retire, a majority of the respondents were pre-retirees. The results of the survey revealed some interesting results, including some of which seem to counter what many of us might consider to be conventional wisdom about retirement.
Below are some of the key findings from Fidelity’s survey:
- Most of the respondents felt they have some say about the time of their retirement.
- Only half of the respondents felt that having enough money is a critical component of retirement.
- The survey found that motivations for retirement include a mix of financial and work-related factors, and that many of the respondents have concerns about health, family and lifestyle.
- Many of the respondents viewed retirement as a time of freedom as opposed a time for pursuing their passions.
- 80% of pre-retirees and recent retirees look at retirement as a new stage of life.
- While 60% of the male respondents expressed interest in spending retirement time with their spouses, only 43% of the female respondents shared the same sentiment.
- According to the survey, turning 50 surprisingly didn’t trigger people to start thinking about retirement.
- Some of the biggest reasons for retiring include the following: leisure at 72%, work stress at 64%, grandchildren at 63%, hobbies at 55% and travel at 54%.
The survey also identified three pre-retirement phases and describes them as follows:
- Early pre-retirement (10+ years out from retirement): This is when people are generally in good health and are feeling optimistic. In this phase people are often still supporting children, as well as aging parents. People in this phase also tend to have substantial debt and are worried about outliving their money.
- Mid pre-retirement (2-9 years out from retirement): This is when debt and responsibilities start to diminish, leaving people with additional funds. This is also when job involvement starts to go down and people are starting to think more about their retirement years.
- Late pre-retirement (less than 2 years away from retirement): Family and free time become a bigger focus. According to Fidelity, priorities shift and people become more financially confident about their retirement. This is a time when work is seen as more stressful and health may start to decline.
If you’re looking for ways to maximize your retirement, below are some recommendations for actions you can take in your pre-retirement years, according to Fidelity:
- Save or invest bonuses and any extra income you receive from cutting expenses
- If you’re age 50 or older, you can take advantage of catch-up contributions for retirement accounts such as 401(k) plans and other individual retirement accounts
- Eliminate high interest debt
- Make investment decisions based on age, risk-tolerance and life expectancy
- Use Health Savings Accounts and Medigap insurance
- And last, but not least, try to avoid stress as much as possible and stay healthy
If you’re looking for ways to supplement your retirement income, a reverse mortgage loan may be an option. A Home Equity Conversion Mortgage (HECM), commonly known as a reverse mortgage, is a Federal Housing Administration insured loan. A HECM enables seniors age 62 and older to access a portion of their home’s equity to obtain tax free2 funds without having to make monthly mortgage payments.3
If you’d like to learn more about reverse mortgages or want to see if you’re eligible, please use our Reverse Mortgage Calculator, or call 800-218-1415.
1 Retirement Study Shatters Myths – get.com, by Eric Bank, 11/12/15, https://get.com/news/retirement-study-shatters-myths/
2 Consult your financial advisor and appropriate government agencies for any effect on taxes or government benefits.
3 You must live in the home as your primary residence, continue to pay required property taxes, homeowners insurance and maintain the home according to Federal Housing Administration requirements.
Author: Meredith Manz