The average recent retiree has saved only a small fraction of the amount recommended by experts, and nearly a third have saved nothing at all. Predictably, a lot of these retirees don’t feel great about their golden years—and a good number of them put some of the blame on their ex-employers.

These are some of the findings from a new study by Clever Real Estate on the unsettling reality of retirement finances in 2022. Some retirees didn’t make enough, some didn’t save enough, and some worked for companies that didn’t offer retirement funds. Many simply lacked a basic financial education. They didn’t realize how important it was to save in their 30s and 40s, how powerful a force compound interest is, or how to save on major real estate transactions. Let’s look at how we got here.

A wave of early retirees

As much talk as there’s been about “The Great Resignation,” part of the phenomenon is due to a “Great Retirement.” Of the millions of people who’ve left their jobs since the beginning of the pandemic, many are older Americans starting retirement. Nearly two-thirds of all retirees (64%) left the workforce earlier than they originally planned.

Many of these early retirees are having second thoughts. Clever’s retirement study found that over half of retirees (56%) now think they should’ve delayed their retirement a little longer. Of those regretful retirees, 40% say they simply didn’t save enough.

But retiree regrets aren’t entirely about money. An equal 40% say they wish they would’ve waited longer to retire simply because they’re bored not working.

As for other regrets about money, 36% of those who regret retiring early say they wish they had more discretionary income, while 31% wish they had more money for necessities. This in itself isn’t surprising, as the average retired household makes around half the income of the average working household—a significant decrease in cash flow that demands a pretty tight budget. What is surprising is that many retirees are caught off guard by this lifestyle change.

What went wrong?

Many retirees blame their underfunded retirements on two main factors

  1. inadequate financial education
  2. insufficiently supportive employers

As we’ll touch on below, a lot of retirees depend on a pension or a 401(k) to fund their golden years. But nearly a third of retirees (31%) say their employers didn’t even offer 401(k) plans or pensions.

And among retirees who did work at companies that helped with retirement savings, over half (54%) say their employers didn’t help enough.

In some cases, the blame could be pinned on the individual employees. Some workers who have access to retirement funds like 401(k) plans don’t actually contribute enough to qualify for an employer match, which means they’re essentially leaving free money on the table. Financial experts say this is one of the biggest mistakes you can make, but a lot of retirees say they didn’t know any better.

Of the two-thirds of retirees (67%) who have regrets about their savings, 52% say they wish they’d better understood retirement savings and investments in general. Many of these retirees may not have understood concepts like 401(k) plans or credit scores. Nearly half (45%) say they waited too long to start saving for retirement, and 33% say they wish they invested in more high-risk/high-reward assets when they were younger.

Young investors, take note: If retirees could pool their wisdom to advise you on your financial strategy, they’d tell you to save early, save a lot, and don’t be afraid to take a calculated risk!

How underfunded are today’s retirees?

Depending on your income, experts advise retirees should have at least $514,800 saved for retirement. But the average retiree surveyed only has about $191,000. That’s barely over a third of the recommended number.

And keep in mind that’s the average retiree. Nearly a third of retirees (30%) have saved absolutely nothing for retirement, relying entirely on Social Security to fund their golden years.

A huge majority (79%) of retirees rely on their monthly Social Security check. The problem is, it might not be enough to cover all their bills. The average monthly Social Security payment is $1,555, while the average retired household spends a little more than $3,800 a month.

Retirees are covering the shortfall with personal savings (38%), retirement fund income (35%), pensions (29%), or by living off investments like stocks (23%). Some of them have even re-entered the workforce.

Can you call them retirees if they’re still working?

One in 10 retirees are still on the job: 7% work part-time, and 3% run a small business or do some consulting. When asked why they chose to start working again, 73% of these working retirees said they need the money for basic living expenses or extra discretionary income. However, that’s not the only reason.

A third of these retirees say they go to work just for something to do/for social interaction, and just over a quarter, or 27%, do so because they enjoy working — and don’t even need the money.

Meager savings plus debt equals stress

Those lucky retirees who don’t need extra money are a privileged few. The majority of retirees are financially stressed — many because they’re still carrying significant debt even though they’ve ended their working years.

A staggering 76% of retired Americans have debt. The most common kind of debt for retirees? About two-thirds of retirees who owe money (67%) say they’re carrying credit card debt, 37% are still paying off a mortgage, 32% are making car payments, and 22% are paying down medical debt. A little further down the list, 8% are still paying off student loans.

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The end result of all this is that, for a lot of retirees, their golden years aren’t so golden. Around a quarter of retirees, or 24%, say they’re stressed about retirement, and over half, or 51%, expect to outlive their savings entirely. In these circumstances, feeling uneasy isn’t an overreaction; it’s completely reasonable.

The question for the rest of us is: What effect is it going to have on the economy when millions of retired Americans become unable to pay their debts and bills? Whether help comes from their families, the government, or some other source, this shift has the potential to profoundly reshape American society—and it’s coming sooner than anyone expected.

Article last modified on April 21, 2022. Published by Debt.com, LLC