Retiree Satisfaction: By the Numbers By: Kevin CollinsMBA

The notion of retirement might conjure images of tranquil fishing trips, leisurely days spent reading and painting, or traveling the world with loved ones. But for real-life retirees, satisfaction in retirement appears to correlate more closely to income stability and to a feeling of confidence in the longevity of savings.

In a 2018 T. Rowe Price survey, we asked retirees who participated in a 401(k) plan about their level of satisfaction in retirement. Most reported that they’re happy and feel positive about the future. Financial goals remain a priority. The vast majority (95%) say they’ve made progress with maintaining their quality of life and budgeting for everyday expenses. Financial peace of mind and the reduction of non-mortgage household debt are also key to satisfaction for most retirees.

This focus on monetary goals means retirees benefit from not only establishing a firm financial foundation before retirement but also from receiving guidance during retirement.

Predictability of income is key
When we asked survey respondents to rank five financial objectives, unsurprisingly -- guaranteed and predictable income were at the top of the list for most. Nearly two-thirds said that having predictable retirement income or guaranteed income later in life were the most important financial objectives . In comparison, only 5% of retirees ranked the ability to leave a bequest as a top objective.

Confidence comes with experience
Insecurity about retirement can run high among pre-retirees, even for those who feel prepared. We asked people who had already entered retirement about concerns they had before and after they retired, from the amount of time they spend with family, to who will care for them if the need arose.
Overwhelmingly, retirees’ pre-retirement concerns abated slightly once they spent a few years in retirement. While (65%) of survey respondents had reported worrying about their assets lasting in their pre-retirement years, only 53% continued worrying about this after they had spent a few years in retirement. These same retirees also felt more confident about how who would provide them with care if needed, how much time they’d spend with family, and whether they’d spend their time meaningfully.

Healthcare, however, remains a worry for most retirees, with 69% saying they’re somewhat or very concerned about their health both before and during retirement. Fears about potential healthcare costs decreased slightly following retirement—dropping to 64% compared with 68% pre-retirement.

Advice: Through—not just to—retirement
Our 2018 survey found that the appetite for advice continues to grow among 401(k) participants of all ages. This remains true with the retiree population, especially when it comes to advice and support related to income and healthcare expenses:
• 70% of retirees want help with managing a plan to convert retirement assets into a stream of income for retirement.
• 63% of retirees who say funding healthcare expenses is a major or minor objective, want guidance.

Advice delivery is just as important to retirees as the type of advice they receive. 83% reported that advice both easy to understand and employ is important. Personal relationships are also crucial; 65% said they wanted a personal relationship with a specific advisor, while only 3% said they were interested in a robo-advisor. Also critical is an alert system to notify them of developments in their accounts.

Digital solutions and mobile accessibility were less important for retirees. While this trend might change over time, as younger workers who are more experienced in technology age, only 26% of retirees we surveyed said they preferred advice that was accessible via mobile device.

The 401(k) as retirement destination?
Over the past couple years, we’ve found that 401(k) participants turn first to their plan’s provider for advice and support—both on retirement and other financial topics. For many, the 401(k) is their introduction to saving and investing for the long term, so it may be common sense for them to start with the plan provider for help on other money matters.

But for many retirees in the past, the end of their employment also brought an end to their investment in the 401(k). Through thoughtful, strategic planning, retirees can be offered retirement income options that enable them to leave their money in the plan. Adding retirement withdrawal options, such as installment payments and partial withdrawals, can give them the flexibility to create an appropriate, consistent income stream within the plan.

At T. Rowe Price, we believe that shining a spotlight on a plan’s retiree population can have benefits for active employees, as well. Encouraging retirees to keep their money invested could potentially generate economies of scale that benefit participants of all ages. And understanding satisfaction among retirees who used the 401(k) to its full advantage can be a powerful tool for increasing the appeal of the 401(k) for younger and older participants alike.

Kevin L. Collins

Kevin Collins is a vice president of T. Rowe Price Group, Inc., and T. Rowe Price Trust Company and the head of Retirement Plan Services. Prior to his current role, Kevin was head of Product and Platforms for Retirement Plan Services. He has also been head of Sales and head of Client Services for Retirement...

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