skip to main content

Few Investors Have Calculated Retirement Income, Expenses

Few Investors Have Calculated Retirement Income, Expenses
by Megan Brenan

Story Highlights

  • 20% of nonretired investors have calculated retirement expenses, revenue
  • Pre-retirees most likely to have considered retirement activities and location
  • They are least likely to have thought about retirement taxes

WASHINGTON, D.C. -- Most nonretired U.S. investors have not carefully calculated how much money they will need in retirement or whether their retirement accounts will cover their annual expenses. While one in five say they have done each of these calculations, two in five admit that they have not given much thought to either, and one-third say they have roughly estimated their retirement expenses and revenue.

Nonretired Investors Doing Limited Calculations About Their Retirement Income
For each of the following financial matters, have you done the calculations needed to determine it, have you estimated it but not done the calculations, or have you not thought much about it?
Have done calculations Have estimated it Have not thought much about it
% % %
The amount of income you will need each year in retirement 20 32 41
The amount of income your retirement accounts will generate for you in retirement 20 33 40
Wells Fargo/Gallup, Feb. 12-25, 2018

The latest results are based on the first-quarter Wells Fargo/Gallup Investor and Retirement Optimism Index survey, conducted Feb. 12-25, 2018. For this survey, U.S. investors are defined as adults with $10,000 or more invested in stocks, bonds or mutual funds, either within or outside of a retirement savings account.

Nonretired investors approaching retirement age are slightly more likely than younger pre-retirees to report having spent time calculating how much money they will need in retirement or what their retirement income and expenses will be.

Bar graph with 3 age categories of investors + whether they have calculated their needed income and actual income in retirement.

Those who have less than $100,000 invested (generally younger people) are less likely than those with $100,000 or more invested (typically older people) to have performed specific retirement calculations.

##SPEEDBUMP##

Nonretired Most Likely to Have Considered Retirement Leisure Activities

The poll also asked nonretired investors how much thought they have given to seven different aspects of retirement. Other than how they will spend their time when retired, fewer than half of nonretired investors have given at least a fair amount of thought to the other aspects of retirement planning.

Nonretired Investors Not Doing a Lot of Retirement Planning
How much thought have you given to each of the following aspects of your retirement -- a lot, a fair amount, a little or none?
A lot A fair amount A little None
% % % %
How you will spend your leisure time 34 19 28 11
Where you will live 32 16 29 16
How you will pay for routine medical care 27 18 30 17
The best age for you to start taking your Social Security benefit 26 19 28 17
The strategy you will use to draw income from your retirement savings accounts 21 20 30 21
How you will pay for possible long-term care or assisted living 20 17 32 23
The amount of taxes you will pay in retirement 16 18 33 25
Wells Fargo/Gallup, Feb. 12-25, 2018

Overall, the percentages of nonretired investors who say they have thought "a lot" or "a fair amount" about each aspect of retirement are:

  • how they will spend their leisure time as retirees -- 53%
  • where they will live -- 48%
  • how they will pay for routine medical expenses -- 45%
  • when to start receiving Social Security -- 45%
  • a strategy to draw income from their retirement accounts -- 41%
  • how to pay for long-term care or assisted living -- 37%
  • the amount of taxes they will pay in retirement -- 34%

As would be expected, the amount of thought nonretired investors have given to various aspects of retirement increases the closer they are to retirement age. Half or more of nonretired investors aged 60 and older say they have given at least a fair amount of thought to each of the seven aspects, but far fewer of those younger than 40 have given them as much thought.

Bar graph: 3 age categories of investors and how much thought they have given to 7 aspects of retirement

Retired Investors' Assessments of Their Own Situations

Retired investors were asked to think back and report on how much thought they had given to the seven facets of retirement in the years before they retired, and their responses were generally similar to those of the nonretirees aged 60 and older. More than seven in 10 retired investors said they were prepared for these seven retirement decisions, but 19% wish they had thought them through earlier and 9% were unsure.

Most Retired Investors Felt Prepared for Seven Retirement Decisions
Overall, were you prepared for these decisions or do you wish you had given more thought to them earlier?
Yes, was prepared Wish had given more thought earlier
% %
72 19
Wells Fargo/Gallup, Feb. 12-25, 2018

The median age at which retired investors say they retired is 62. At a time when many older Americans are working longer to make up for a lack of savings and maximize their Social Security benefits, nearly one-quarter of retired investors say they exited the workforce earlier than they would have liked. Still, two-thirds say they retired at their desired age.

Most Retired Investors Left Workforce at Desired Time
Did you retire earlier than you would have liked, later than you would have liked or at the time you wanted to?
Earlier than would have liked Later than would have liked At time wanted to
% % %
22 3 67
Wells Fargo/Gallup, Feb. 12-25, 2018

Bottom Line

Most nonretired U.S. investors -- particularly those who are younger -- have not calculated their anticipated retirement income or expenses with any specificity. They are also in no rush to plan ahead for some of retirement's thornier issues, including how they will pay for routine medical expenses, when to start receiving Social Security, and what they will do about long-term care or assisted living. They are most likely to have thought about how they will spend their leisure time and where they will live in their golden years.

While working later in life in order to maintain income and maximize Social Security may sound appealing to those who have not yet retired, health crises, layoffs and other issues beyond investors' control could derail these plans. As such, investors would be well-advised to start their retirement planning as early as possible.

Survey Methods

Results for the Wells Fargo/Gallup Investor and Retirement Optimism Index survey are based on telephone interviews conducted Feb. 12-25, 2018, on the Gallup U.S. Daily survey, with a random sample of 1,321 adults, aged 18 and older, living in all 50 U.S. states and the District of Columbia having investments of $10,000 or more.

For results based on the 842 nonretired investors, the margin of sampling error is ±4 percentage points at the 95% confidence level. For results based on the 477 retired investors, the margin of sampling error is ±6 percentage points at the 95% confidence level. All reported margins of sampling error include computed design effects for weighting.

Each sample of national adults includes a minimum quota of 70% cellphone respondents and 30% landline respondents, with additional minimum quotas by time zone within region. Landline and cellular telephone numbers are selected using random-digit-dial methods.

Learn more about how the Wells Fargo/Gallup Investor and Retirement Optimism Index works.

Gallup


Gallup http://news.gallup.com/poll/232340/few-investors-calculated-retirement-income-expenses.aspx
Gallup World Headquarters, 901 F Street, Washington, D.C., 20001, U.S.A
+1 202.715.3030