Learn from their mistakes. Biggest regret? A general lack of funds.
Grandma and Grandpa have some stern advice for the younger generation: learn from their mistakes. Now that they’ve reached retirement, they’re finding that a lack of funds is their biggest dissatisfaction, and they strongly urge younger Americans to open a 401(k) or IRA as soon as possible and fund it as much as possible.
Their advice; prioritize retirement planning, or you’ll regret it later.
That’s part of the findings of a survey by BMO Harris Premier Services, which found that 75 percent of non-retirees under 60 are using a 401(k) and IRA.
“It’s probably better than it was, but it’s not as high as it needs to be,” says Stuart Thompson, head of the premier banking strategy and segment management at BMO Harris Bank. “Ninety-three percent of those retirees spoke up about the need to open up 401ks and IRAS as soon as you can and not waiting until you’re 50s.”
The survey shows that nearly half of the more than 3,200 American surveyed don’t know when they will retire. Only 43 percent have put some thought into retirement, and 38 percent haven’t thought about it all.
“Some of the things we learned are that you can’t prepare soon enough,” Thompson says. “And preparing isn’t just about money. From my prospective, a good financial advisor won’t talk about what you need until you talk about what you want to do.”
When Americans are asked what they plan to do once in retirement, 56 percent said they plan to spend their golden years relaxing, 50 percent say they want to spend time with friends and family, and 46 percent would like to travel. Other plans included focusing on hobbies (39 percent) and working (30 percent) – whether it be part-time in their current career (20 percent) or starting a new business (9 percent).
The study also polled current American retirees on what challenges they have faced in retirement. It found that although 86 percent are satisfied with their retirement lifestyle, 14 percent are unsatisfied with some lifestyle aspects, Thompson says.
Among those unsatisfied retirees, 83 percent cited lack of funds and health issues (37 percent) as their top challenges in retirement. That prompted 93 percent to recommend opening up a 401k plan or IRA as soon as possible. Some 79 percent urged people to pay off their mortgage as soon as possible.
“You don’t want to head off into your retirement with debt,” Thompson says. “Ideally what people would do is make sure their debt is paid off first, then build up savings in their 401k and IRA.”
Other wise advice? Talk more with your partner about your retirement goals. More than 90 percent of retirees say that their partners need to have an idea what they want to do together in retirement.
“Talk to your spouse and talk to your family,” Thompson says. “Often, we talk to a couple, and each has a different view. As people are living longer, it’s important they have a plan that works for both of them.”
One happy surprise in the survey, Thompson says, is how 86 percent say they’re satisfied with their retirement lifestyle. Given that many wish they would have saved more money for retirement, Thompson says it’s an example of people adjusting their expectations because they have to make do with the money that they have.
“Overall, I am still concerned,” Thompson says. “We aren’t where we need to be. We still have a significant amount of people who aren’t sure what they need to do. The message is there to make sure you have a plan and are seeking financial advice. Talk to someone who can look at what you need in terms of retirement planning and look internally and develop that plan.”