Retirement

4 Financial Lessons to Learn From Retirees (Before You Retire)

The 2017 Wells Fargo Retirement Study shared insights from today's retirees that can — and should — have an impact on how others plan for retirement.

by Sarah Tuff Dunn - April 02, 2018

First, the good news: 68% of respondents to the 2017 Wells Fargo Retirement Study say they are prepared for retirement, and 34% of workers age 30-plus say retirement is a top priority.

Unfortunately, there’s some bad along with the good: 72% of respondents wish they’d started saving earlier, and 30% report they won’t have saved enough to live on in retirement.

What can we learn from these numbers? Here, Donna Peterson, Retirement Income Strategist at Wells Fargo Advisors, outlines four of the top lessons retirees can teach the rest of us.

Retiree Lesson 1: Expect some surprises

Real-life twists and turns can impact even the most prepared among us. The survey reports that 51% of retirees had to stop working earlier than expected, for example, and 36% say their standard of living dropped when they retired.

“Even the best-laid plans may experience changes over time,” Peterson says. “Being forced into early retirement due to company downsizing can have a big impact on retirement finances, as can losing a spouse, caring for an aging parent, having children move back into your home, or facing a serious health condition.” Your financial advisor can help you minimize — or navigate — these uncertainties and help you take any necessary actions to potentially improve your retirement outlook.

Retiree Lesson 2: Be consistent with your 401(k) or other employer plan

A whopping 89% of American workers report they wouldn’t have saved as much without a 401(k) plan, according to the Wells Fargo research. A 401(k) plan often offers ways to develop consistency in saving through automatic enrollment and payroll deductions. The lesson here? Save as much as you can and make contributions to your retirement funds as consistently as possible.

68% of respondents to the 2017 Wells Fargo Retirement Study say they are prepared for retirement.

Retiree Lesson 3: Have a handle on health care in retirement

The rising cost of health care is the biggest concern for 29% of 50-somethings — and it’s one of the top concerns in retirement planning.

“Trying to figure out how much money you’ll need to set aside for health care in retirement is complicated,” says Peterson. “Geographic location, health conditions, prescription drug prices for specific health issues, and many other factors can affect cost estimates.”

Though Medicare coverage kicks in at age 65, retirees still need to plan for additional costs. “Medicare covers only part of the cost of services for beneficiaries, so retirees can still face hefty health care costs,” Peterson explains. “If you need long-term custodial care, you’ll need to plan for that coverage as well.”

Retiree Lesson 4: Create a retirement budget early

“Start thinking now about how you will pay for your lifestyle in retirement,” says Peterson. “Then set a retirement savings goal that takes into account your target retirement age, projected retirement time frame, estimated future expenses — including health and long-term-care costs — and expected retirement income, including Social Security.”

Keep in mind that any plan you enact to reach your savings goal will be constantly evolving. Regular check-ins with your financial advisors to talk through your progress, market conditions, and other variables will help you stay on course for the long term. 

Sarah Tuff Dunn is a freelance writer in Vermont and a frequent contributor to Lifescapes. Her work has also appeared in The New York Times.

Image by iStock

Additional Resources

Wells Fargo Advisors can help you learn the details of creating a retirement income plan and help set your retirement strategy.