Economy Takes a Toll on Retirement Planning Process

An Ameriprise news release said the changes were significant enough that researchers created a new sixth stage of the retirement process for the “hesitation” group that previously had been lumped in with those two years away from retirement.

The news release said members of the “hesitation” group are now less likely to have set aside money in employer-sponsored plans or their own savings/investments than in 2005 (74% vs. 91%) and fewer expect to feel “happy” in retirement than did so in 2005 (82% vs. 92%).

The “hesitation” group members are also far less likely than those in the “anticipation” stage (two years prior to retirement) to be setting aside money in their own savings/investments (67% vs. 83%) or to expect to greatly enjoy retirement (64% vs. 75%).

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The Retirement Planning Stages  

According to the news release, the remainder of the study categories and their related findings included:

Imagination (six to 15 years prior to retirement) – People in this earliest stage preceding retirement are feeling substantially less “hopeful” (71% vs. 81%) and “optimistic” (72% vs. 77%) than they were in 2005. However, they remain generally positive – 84% feel “happy” and 70% feel “enthusiastic” about retirement.

Anticipation (two years prior to retirement) – People in this stage are the most likely to feel “on track” for retirement (77%), possibly because they are also the most likely to be setting aside money in their own savings/investments (83%) and working with a financial adviser (54%).

Realization (retirement day to one year following) – The decrease in positive feeling among those in this category is dramatic – compared to 2005, far fewer are enjoying retirement “a great deal” (56% vs. 78%), say they are living their dream in retirement (45% vs. 68%), or feeling that retirement has worked out as they planned (57% vs. 77%).

Reorientation (two to 15 years after retirement) – Most people enter the “reorientation” stage feeling more “happy” (80%) and “on track” for retirement (69%) than they did in previous stages. They continue to enjoy having “control over their time,” and to an even greater extent than in 2005. They are also better prepared than they were five years ago – more report that they set aside money for retirement (83% vs. 72%) and are working with a financial adviser (43% vs. 34%).

Reconciliation (16 or more years after retirement) – While the vast majority of people in the "reconciliation" stage continue to feel “happy” (80%), they are experiencing depression at a significantly higher rate than in 2005 (20% vs. 5%). Troubled by the loss of income and social connections, they are among the least likely to say they are enjoying retirement “a great deal” (56%) – and less so than in 2005 (75%).

“Coming out of the recession, it may not be surprising that people – especially those who are closest to their retirement day – are looking at this important milestone differently,” said Craig Brimhall, vice president of retirement wealth strategies at Ameriprise Financial, in the news release “However, I’m encouraged to see consumers in some stages take a more proactive approach to planning and saving. I believe that the more people understand the stages of retirement and prepare themselves – emotionally and financially – the more likely it is they’ll have the confident and fulfilling retirement they desire.”

The categories in the current study are 1) Imagination, 2) Hesitation, 3) Anticipation, 4) Realization, 5) Reorientation and 6) Reconciliation. This compares to five stages that were identified in the previous study: 1) Imagination, 2) Anticipation, 3) Liberation, 4) Realization and 5) Reorientation.

The New Retirement Mindscape II and New Retirement Mindscape studies were commissioned by Ameriprise Financial, Inc. and conducted by telephone by Harris Interactive in May 2010 and August 2005 among 2,007 (2010) and 2,000 (2005) U.S. adults age 40-75.