Redefining Retirement: The New Retirement Readiness
‘Retirement readiness’ has become a common term in our vernacular. It was inspired by the imperative for Americans to take an even greater role in funding their retirement due to widespread recognition of increases in life expectancies, questions about the future of Social Security, and the shift from traditional defined benefit plans to self-funded 401(k) and other defined contribution plans.
A myriad of characterizations of ‘retirement readiness’ have emerged, many of which describe it as a gauge to determine whether a worker’s nest egg is adequate to retire at age 65 and generate sufficient income to last throughout his/her retirement years.
Given the many challenges associated with the on-going recession, financial crisis, and low interest rate environment, are these definitions of ‘retirement readiness’ still relevant? And, how prepared are American workers?
Redefining Retirement: The New ‘Retirement Readiness’ assesses the expectations and preparations of American workers. The research report shows that many workers are financially ill-prepared to retire at age 65. Moreover, many expect to work past age 65 and plan to continue working in retirement.
In response, Transamerica Center for Retirement Studies proposes a new definition:
‘Retirement readiness’ refers to a state in which an individual is well-prepared for retirement, should it happen as planned or unexpectedly, and can continue generating adequate income to cover living expenses throughout his/her lifetime through retirement savings and investments, employer pension benefits, government benefits, and/or continuing to work in some manner while allowing for leisure time to enjoy life.
The report is based on findings from The 13th Annual Transamerica Retirement Survey. It examines key indicators of retirement readiness and provides segmentation analysis by age range. The survey of more than 3,600 workers was conducted in 2012.