T. Rowe Price: New Retirees And Those Approaching Retirement Age Are Faring Well

More surveys, oh how I don’t like surveys but alas they serve to influence our thinking distorted or not. I have serious doubts about these results especially the paragraph I highlighted. Living on 66% of pre-retirement income? Of course it’s possible, and some folks may be happy doing so – as long as nothing goes wrong. There is no margin for error.

For most people 66% means covering basic expenses and not much more. Is that your goal for retirement? I submit to cover all the bases for 25 or more years you need to start retirement with close to 100% income replacement from a variety of sources.

Survey findings among retirees:

Many have considerable savings: Recent retirees reported median household assets (investable assets plus home equity minus debt) of $473,000, with 48% having $500,000 or more in household assets. Of their investable assets, 38% was in stocks and stock mutual funds, 13% was in asset allocation mutual funds, and 31% was held in cash. [So it appears investible assets are about $473,000 minus $191,000=$282,000].

More than eight in 10 (82%) of the retirees own real estate with a median of $191,000 in home equity.

Social Security accounted for the largest portion of their income: 43% of their income came from Social Security. The second largest source came from traditional defined benefit plans (19%), followed by amounts withdrawn from personal savings and investment accounts including IRAs and defined contribution plans (18%).

Work is part of the picture: 21% are working either part-time (16%) or full-time (4%). Another 14% are retired but looking for work.

Those with a withdrawal plan are withdrawing close to 4% of their assets annually: 48% of retirees indicated that they have a withdrawal plan, and the median retirement withdrawal among them was 4% of their investable assets within the past 12 months. But the average does mask some extremes, including nearly a quarter who withdrew 8% or more and over a quarter who withdrew only 1%.

Living on less: Nearly three years into retirement, retirees report living on 66% of their pre-retirement income on average. But that has not translated to dissatisfaction with their lifestyle: 57% report they live as well or better than when they were working. And 85% agree with the statement, “I don’t need to spend as much as I did before I retired to be satisfied,” including 37% who say this describes them a “great deal.”

Most (65%) like not spending as much and see it as a new found freedom from “keeping up with the Joneses,” with 25% saying this describes them a “great deal.” They feel satisfied: 89% are somewhat or very satisfied with retirement so far. Additionally, 74% say they are somewhat or much better off financially compared with how their parents lived when they were their age.

Most are flexible: 60% of the retirees would rather adjust their spending up and down depending on the market to maintain the value of their portfolio rather than maintain the same level of spending year after year, at the expense of potentially diminishing their portfolio.

But there are exceptions…not everyone is well off:

Households of retirees who are not married or living with a partner, are not doing as well as their married counterparts, both financially and emotionally. And women represent a greater proportion of single households than men: 48% of women reside in single households compared with 26% of men. These single households have only a median of $248,000 in investable assets plus home equity minus debt combined (compared with $731,000 for married households).

They are more likely to be looking for work (19% vs. 11%), a higher proportion are finding it difficult to live without their preretirement paycheck (36% vs. 27%), more believe that they will run out of money (19% vs. 11%), and fewer are “very satisfied” with their retirement experience (37% vs. 48%).

Source: T. Rowe Price: New Retirees And Those Approaching Retirement Age Are Faring Well | T.Rowe Price


  1. We retired with less income than our pre-retirement income. We are very happy with our life. While we continue to save money, we are not saving at the same rate as when we were working. Nor are we making house payments. And we live with one car since which fits us just fine. We are not withdrawing from investments at this point. Nor are we looking to work part time. The bolded paragraph in the post rings true for us.


  2. We saved enough to meet more than 100% of our pre retirement income , but since we retired four years ago in our early 60s , we haven’t needed nearly that amount. In some future years we will (buy new car with cash , take expensive trip, have house painted, give downpayment help to relatives ) . But that won’t be every year. We both had long commutes and ate out every day in Boston (expensive). I had a very expensive wardrobe but I still wear those clothes, only supplementing here and there with an occasional new piece. We drive less, eat in a nice restaurant only once a week. The pandemic stopped overseas travel , cruises for us. I have more time since I retired for friends now, which makes me happy. I am fortunate that I have maintained several long and close friendships , one even from kindergarten, some from college ,some from early and mid career and some are former neighbors. We are within a hour’s drive to immediate family and some extended family. That is what is really important to me.


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