EBRI Asks What It Takes to Retire Without Regrets

The Employee Benefit Research Institute has published a new “Fast Facts” report based on the research organization’s Retiree Reflections Survey, which examined potential barriers to retirement goal setting and planning as well as regrets related to past financial behavior among retirees with more than $50,000 in liquid financial assets.

As summarized in the “Fast Facts” report, many of the 1,109 retirees surveyed claimed they would change their past financial behavior to improve their current living situation. A sizable number wished they started saving earlier for retirement, EBRI reports, but fully one-third of retirees did not share in the three most common major financial regrets.

For its analysis, EBRI used two primary data points to flag retirees as not having major financial regrets. First, retirees had to reply in the negative when asked this question: “Looking back over your working years, would you have changed anything about your financial habits to improve your current financial situation?” Second, the retirees also had to disagree—whether passively, somewhat or strongly—with this statement: “I wish I started planning earlier for my retirement.”

As the “Fast Facts” report spells out, 32% of the survey respondents fall into this category.

“There are some moderate differences in financial behaviors between retirees with major financial regrets and those without,” the report notes. “On average, retirees without major financial regrets reported substantially higher liquid financial assets, with an average of $711,000 (and a median of $450,000) compared with an average of $434,000 (with a median of $226,000).”

EBRI’s data show that those retirees who are experiencing fewer regrets take care to understand and manage their daily expenses. This group also reported an ease in understanding how to use their retirement savings effectively.

“Relative to more general demographics, the more notable differences between those with regrets and those without were related to higher education and health status,” the report explains. “Specifically, 58% of retirees without major regrets reported having a college degree or higher as compared with 48% of retirees with major financial regrets. Similarly, 58% of retirees without regrets rated their health as a seven or higher as opposed to 44% among retirees with major financial regrets.”

In an open-ended format, EBRI asked all retirees, whether they had major financial regrets or not, what they felt was the one thing they did right in their financial preparation for retirement. Half of retirees reported “saving” or “investing” as the one thing they did right to prepare financially for retirement.

“In these open-ended responses about saving, many retirees explicitly highlighted maximizing contributions in an employer-sponsored or individual retirement account,” the “Fast Facts” report states. “Other top-of-mind positive financial decisions included working with an adviser, spending frugally, paying off debt and housing choice.”

Ultimately, the report concludes, the “secret sauce” to a retirement without major financial regrets comes as no surprise: “It involves sufficient savings, confidence in understanding how to use those savings in retirement, and facility in managing daily expenses.”