What Recent Retirees Wish They Had (or Had Not) Done

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What Recent Retirees Wish They Had (or Had Not) Done
Survey reveals that if retirees could plan it again, they would plan better
By Sharon O'Brien, About.com

Although many recent retirees (66%) report that they are living the lifestyle that they wanted in retirement, a little more than half (57%) look back on the years before retirement and wish they had done more to prepare, according to a 2005 study by Fidelity Investments.

There’s a lesson here for people who have not yet retired but are thinking about it.

“Workers approaching retirement often look to their peers who have already gone through the process for valuable lessons learned,” said Steve Deschenes, executive vice President of Fidelity Institutional Retirement Services Company, in a news release.

“Those living in retirement now can provide valuable insight to people getting ready to make that transition, from knowledge of the basic fundamentals such as the key elements of a successful income plan, to identifying resources that can help with critical decisions that need to be made.”

“This can have a dramatic impact on the quality of life today’s pre-retirees will experience when they retire.”

What Retirees Wish They had Done
At the top of the “wish list” for many recent retirees is wishing they had:

* Created a budget (21%)
* Created an asset allocation strategy (19%)
* Developed an income source withdrawal strategy (18%)
* Better understood 401(k) plan payout options (19%)
* Retired later (17%)

“Wish List” for Pre-Retirees
Fidelity reports that although the vast majority of pre-retirees (81%) say they have a high level of confidence that they will be able to live the lifestyle they want in retirement, many have yet to complete a number of critical planning steps.

* Two-thirds of pre-retirees (68%) have not completed a budget of anticipated income and expenses

* Three-quarters (74%) have not yet determined an asset allocation strategy for managing their income in retirement while seeking continued growth for their savings.

Workers nearing retirement also show a need for additional guidance and education on fundamental financial issues surrounding retirement.

* Only 28 percent reported that they fully understand how much they can spend monthly during retirement without outliving their savings

* Less than 23 percent say they fully understand which retirement income sources to spend first to minimize taxes.

* Half (50%) of the pre-retirees surveyed were also unsure of the age at which most people can withdraw money from a tax-deferred savings plan without incurring a penalty (59.5 years).

Employer Retirement Guidance: Highly Valued, But Underutilized
Fidelity reports that when recent retirees are asked what advice they would offer to a friend or family member within a year of retiring, they most often recommended seeking guidance to help with the retirement transition.

Most retirees (77%) also report that they neglected to turn to their employer for assistance and guidance throughout the retirement process. Those who did, however, saw significant value in the guidance they received, with the vast majority (92%) saying they found it to be valuable, including 32% who say that they “could not have made the transition without it.”

What Can We Learn from This Retirement Survey?

* Do your homework. Understand the benefits your will receive, and learn the tax rules regarding your investments.

* Make a retirement plan. Know how much you can expect to earn on your investments, be realistic about your expected expenses, and create a budget.

* Get help. If your employer can help you understand your retirement benefits, take advantage of the help. If that's not an option, you might benefit from seeking professional advice. Make sure your advisor is reputable by checking credentials.

About the Fidelity Retirement Survey
The Fidelity Investments Retirement Transition Study was conducted by Richard Day Research, Inc. (RDR) in November and December 2004. RDR surveyed 749 pre-retirees within one year of retiring, and 755 retirees within three years of having retired, who work for, or have retired from, an employer with more than 5,000 employees and hold a DC or DB plan from that employer.

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