This article was posted on Tuesday, Mar 01, 2016

Retiring comfortably has gotten a lot more complicated in recent decades, much of it due to our increasing longevity – a welcome development that is largely out of our control.

However, unwelcome developments that are within our control are increasingly contributing to the retirement challenge too, including heavy debt and what appears to be blissful denial of the costs of their “Golden Years” by many who are nearing retirement or already retired. 

Let’s look at some facts and statistics about retirees in a recent report from the Transamerica Center for Retirement Studies (TCRS).

One in five retirees today has a mortgage that competes for limited resources for basic living expenses and healthcare costs, according to the report. A third (33%) of homeowners 65 and older had a mortgage in 2011, up from 22% in 2001, the Consumer Financial Protection Bureau recently reported (leave it to the government to report old data). 

And these seniors’ mortgages were bigger: a median $79,000 in 2011, up from an inflation-adjusted $43,400 a decade earlier. The number of households headed by someone at least age 65 with a mortgage rose to 6.1 million from 3.8 million over the same decade, the Bureau found.

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One in four retirees have high credit card balances, and paying them down should be a priority. These findings echo earlier research showing an alarming trend toward quitting work while still in debt, long held to be a retirement taboo.

Only 16% of retirees strongly believe that they built a sufficient nest egg. Total household savings in all retirement accounts among retirees at the time of their retirement was just $131,000 in 2011.

Almost nine in 10 say Social Security is a current source of retirement income, and 61% expect it will be their primary source of retirement income for the rest of their life. They typically began taking Social Security at age 62, the earliest possible age – which is usually a big mistake. Only 1% waited until age 70, when they could collect the maximum monthly benefit.

Many retirees left work before they intended: 60% left unexpectedly, often due to being fired or laid off or dissatisfaction with their job, or for health or caregiver reasons. Only 16% retired early because they already had enough savings.

Some of the blame rests with the Great Recession, when those nearing retirement may have been compelled to use their home equity as a lifeline. But in the years before the crisis millions of homeowners used low interest rates to acquire bigger houses and second homes or refinanced and took cash out of their primary residence. A decade later, these decisions are coming home to roost.

Surprisingly, most retirees show few signs of regret, according to the latest survey. They typically expect to live to age 90. Seven in 10 say they are in good health and 94% say they are happy, TCRS found. Some 84% enjoy a strong sense of purpose. Maybe retirees are finding that they do not need as much money to be happy. But it’s also possible they are in deep denial.

That appears evident in the advice today’s retirees have for young workers, the TCRS survey found. Three in four retirees wish they had saved more on a consistent basis; 68% wish they had been more knowledgeable about investments; and almost half (48%) said they waited too long to get involved in their own financial security.

But are younger Americans listening? Probably not. 

How Much Do I Need to Save for a Secure Retirement?

This is by far the most often-asked question to those of us in the financial industry. I wish I could give you a simple and accurate rule of thumb that could assure you’re saving enough to stay on track toward a secure retirement. But I can’t because there isn’t one.

The 10%-of-salary figure is often tossed around as a viable benchmark – and it might be if you started saving that amount in your early 20s and stuck to it faithfully over the next 40 years or so. But few of us actually adhere to that regimen. Most of us get a late start at saving that much or have years when we save less than 10% or we may even dip into our savings occasionally.

To allow for more leeway in building a nest egg, many pros suggest a higher target of 15%-of-salary, which is the figure cited in recent research by the Center for Retirement Research at Boston College.

But the reality is that no percentage or formula can cover all situations. There are just too many variables that affect how much you need to save, including how much you already have in savings; the retirement lifestyle you envision; how much of your pre-retirement income you’ll need to replace once you retire; and of course, the age at which you plan to retire. Other variables include: how you invest your savings prior to and during retirement and how long you expect to live.

And then you’ve got to throw in the major wild card of healthcare expenses, which depending on how much medical care you need later in life and how much the cost of such care rises, can have a major impact on the size of the nest egg you’ll need and thus how much you must save to build it. As you can see, it’s complicated and most investors need the help of a professional.

[Dan’s Note:  Even better, we need to teach our kids to: 1) Save a portion of all they earn; 2) buy an apartment building; 3) pay it off and 4) buy another, etc.  Owning an apartment building is the best “retirement plan”.   And … borrow no money except to purchase appreciating assets!  No auto loans or borrowing money for that dream trip or college expenses!] 

The above article was written by Gary D. Halbert.  Mr.  Halbert is the president and chairman of Halbert Wealth Management, Inc. His Forecasts & Trends Weekly E-Letter may be obtained free of charge by subscribing at