Produced in conjunction with the Scripps Gerontology Center at Miami University, the survey was based on in-depth personal interviews with 50 pre- and post-retiree, couples and individuals, and a nationally representative online survey of 1,007 respondents age 50-70.
“We found that actively preparing for the surprises that inevitably come our way is the most successful approach to retirement,” said Sandra Timmermann, Ed.D., director of the MetLife Mature Market Institute. “Knowing you will have guaranteed income sources available and access to emergency funds is key. To maximize income in retirement while maintaining liquidity, consider options beyond low-yielding savings accounts. Some annuity and home equity products enable you to have access to cash while optimizing returns at the same time. Ultimately, the capacity to withstand the unexpected is dependent on the ability of people to imagine, anticipate and prepare for the circumstances that are often beyond their control.
“And, while we’ve witnessed trends away from marriage over the past decade, we found in this data that two people who communicate have an advantage when it comes to retirement. In addition to the likelihood of two incomes in a dual-person household, we have evidence that two heads are better than one. Couples who work together to save and find the right financial vehicles to help them through the ‘decumulation’ phase make the most progress.”
Kathryn B. McGrew, Ph.D., associate professor at the Scripps Gerontology Center at Miami University, said, “It’s not too late for those who have not retired. We conclude in this study that while there is no universal approach to retirement, it would be helpful for those who find themselves in one of the less desirable categories to work on their plans with their partners, families and/or trusted financial advisors. In general, financial planners and planning tools do a good job of taking individual values, preferences and resources into account to achieve a ‘best fit’.”
The study found that when it comes to finances, there are ten types of people:
1. Snoozers who don’t think about future risks at all. Future risks are not on their radar screens.
2. Active Resisters who “choose to snooze,” or choose to ignore information about future risks.
3. Immobilized Worriers who understand future risks, but whose worry prevents them from acting.
4. Oversleepers who are late in their thinking and planning and may regard their decision or action windows as “come and gone.”
5. Wood Knockers who think about the unexpected but rely on hope; they choose optimism. Somehow, things will “work out.”
6. Plan B-ers who hold on to a contingency plan, or the loose idea of one, as a protection against trouble ahead. A Plan B may be a “plan” in name only.
7. Realists who use the lessons of past experience to think about the future.
8. Stewers and Brewers who take a while to make decisions. Stewers may fuss and fret, while Brewers play with ideas and planning strategies.
9. Compromisers who think about both today and tomorrow and balance their current needs against future risks.
10. Preemptive Planners who strive to preempt future risks, or at least their consequences.
“We acknowledge that everyone at one time or another may have attributes from each of these different types,” said Dr. Timmermann. “While no one is perfect, it is ideal for people to at least aspire to being a planner as opposed to one who ‘knocks on wood’ and hopes for the best.”
On average, survey respondents spent 15 hours in the past six months gathering information or planning for retirement and one in five spent no time on planning. Saving stood out as the most common item among survey respondents as “the one thing” they would do differently; many would start saving earlier (29%), some would save or invest more (12%), and others would make better investments (4%).
Only two in ten survey respondents report that they are very confident that they will have enough money to live comfortably if they or their spouse/partners live to 85+ years of age, and another six in ten (58%) are only somewhat confident. The remaining 22% are not confident in their retirement security. More than two-thirds (68%) of those who did feel at least somewhat confident about a comfortable standard of living and a long life identified a guaranteed stream of income as a reason for their confidence, followed by 51% who identified sufficient savings as contributing to their confidence.
The answer, according to the study, is to become a “Preemptive Planner,” one with a sense of self-reliance who thinks about the future, anticipates the unexpected, sets and lives by personal finance rules, gathers information and takes action. Preemptive Planners have multiple sources of retirement income and assets; the types of sources vary by such features as the presence or not of a defined-benefit plan; 401(k) plans; other investments; eligibility for Social Security; annuities; and health insurance.
