Characteristics and Spending of Retirees in 2020

One-fifth of households in the United States are headed by retirees, according to the Bureau of Labor Statistics' 2020 Consumer Expenditure Survey. The 28 million households headed by retirees are more numerous than most other occupational groups, behind only households headed by managers and professionals (35 million). Households headed by retirees outnumber those headed by technical, sales, and clerical workers (19 million), service workers (16 million), the self-employed (9 million), operators, fabricators, and laborers (6 million), and construction workers and mechanics (4 million).

Characteristics of households headed by retirees, 2020

Average age of householder: 73.9 years

Average household size: 1.7 people

Average number of vehicles: 1.7

Percent who own their home: 80%

Percent with a mortgage: 23%

Percent with at least some college: 61%

Households headed by retirees spent an average of $46,111 in 2020. They spend more than their income ($42,397) as they draw down savings. Retiree households spend less, on average, than households headed by workers regardless of occupation... 

Average annual spending of households by occupation of householder, 2020

$82,320: self-employed

$80,855: managers and professionals

$59,168: technical, sales and clerical workers

$57,401: construction workers and mechanics

$53,604: service workers

$52,065: operators, fabricators, and laborers

$46,111: retirees

Source: Demo Memo analysis of the Bureau of Labor Statistics' 2020 Consumer Expenditure Survey

Fewer Are Claiming Social Security Benefits at 62

Boomers are waiting longer to retire than their parents did. Only about one in four Boomers born in 1957 claimed Social Security retired worker benefits at the earliest possible age of 62, according to an analysis of Social Security Administration data by the Center for Retirement Research at Boston College. In contrast, early claiming was the norm for men and women born in 1940 or earlier. 

Early claiming has fallen with each succeeding cohort of Boomers (birth years 1946 through 1964), with the exception of an uptick in 2009 as a consequence of the Great Recession. Boomers born in 1957 turned 62 in 2019, the latest year for which SSA data are available... 

Percent who claimed Social Security benefits at age 62, by birth year and year turned 62

Birth year	Year 62	Men	Women
1957	2019	24.4%	26.6%
1956	2018	26.8	29.3
1955	2017	28.0	30.7
1954	2016	29.4	32.4
1953	2015	31.4	34.9
1952	2014	33.4	36.9
1951	2013	35.5	39.4
1950	2012	37.8	41.5
1949	2011	40.8	44.3
1948	2010	43.6	46.8
1947	2009	45.2	48.7
1946	2008	39.7	44.7
1940	2002	50.2	54.6
1930	1992	56.6	61.4

The fact that so few Boomers are claiming benefits early is a good thing. "Claiming later will lead to a higher monthly benefit check and generally improve retirement income security," say CRR's Anqi Chen and Alicia H. Munnell. While the Covid recession may have boosted early claiming in 2020, the researchers do not think it will permanently reverse the trend towards later claiming.

Source: Center for Retirement Research at Boston College, Pre-Covid Trends in Social Security Claiming

The Impact of Covid-19 on Workers' Retirement Outlook

The Transamerica Center for Retirement Studies (TCRS) has been surveying the nation's workers about their retirement plans for two decades. TCRS fielded its 20th annual survey late in 2019. Then coronavirus happened, threatening to make the 2019 results irrelevant. So, TCRS rolled up its sleeves and went back into the field in April 2020 to measure the effects of the pandemic on retirement planning.

Many workers are worried, according to the April findings. Overall, 23 percent say the pandemic has made them less confident in their ability to retire comfortably. Boomer workers are most likely to say they have lost confidence...

Percent with less confidence in ability to retire comfortably because of the pandemic
Millennials: 20%
Gen Xers: 25%
Boomers: 32%

The 58 percent majority of all workers say their job has been impacted by the pandemic, with the largest share saying their hours have been reduced. A substantial 22 percent plan to or already have dipped into a retirement account because of the pandemic—33 percent of Millennials, 15 percent of Gen Xers, and 10 percent of Boomers.

Even a small dip into retirement savings is likely to make a large dent. Although most workers are saving for retirement, they haven't accumulated much. The median amount workers have saved for retirement is only $23,000 for households headed by Millennials, $64,000 for Gen Xers, and $144,000 for Boomers.

Source: Transamerica Center for Retirement Studies, 20th Annual Transamerica Retirement Survey

Fewer Claiming Early Social Security Benefits

The percentage of older men and women who claim Social Security benefits at age 62—the earliest possible age to begin receiving retired-worker benefits—has dropped steeply over the past two decades. Behind the decline is the greater labor force participation of older Americans, according to an analysis by Patrick J. Purcell of the Social Security Administration. The labor force participation rate of men aged 60 to 64 grew from 53 to 63 percent between 1995 and 2018, while the labor force participation of their female counterparts climbed from 38 to 52 percent.

Among 62-year-old men, the rate of Social Security claiming fell from 44.1 percent in the 1995–99 time period to just 22.1 percent in 2015–18. Among 62-year-old women, the figure fell from 49.4 to just 24.6 percent during those years. Apparently, older Americans are getting the message—the longer they wait to claim Social Security, the bigger their monthly benefit.

As early claiming has declined, there has been a surge in claiming at age 66—deemed Full Retirement Age (or FRA) by the Social Security Administration for those born between 1943 and 1954. Among 66-year-olds in 2015–18, the rate of claiming was 55.7 percent for men and 48.0 percent for women. These figures are up sharply from the 28.2 and 27.7 percent, respectively, of 1995–99.

Purcell notes in his analysis that "trends in retirement age—and in the age at which individuals claim Social Security benefits—can change substantially in a short time." We're about to see just how rapidly claiming rates can change. As older workers lose their jobs due to the coronavirus pandemic, early claiming of Social Security benefits may become more popular again.

Source: Social Security Administration, Employment at Older Ages and Social Security Benefit Claiming, 1980–2018

What Explains the Retirement Savings Shortfall?

In a perfect world, the typical worker would have saved $364,000 in a 401(k)/IRA retirement account by the time he or she was aged 55 to 64. Instead, the typical worker at age 55 to 64 has accumulated only $92,000.

What accounts for the gap in what should be and what is? In a study to determine the reasons for the gap, researchers at the Center for Retirement Research (CRR) analyzed IRS tax records and data from the Census Bureau's 2014 Survey of Income and Program Participation. First they estimated potential 401(k) balances in a perfect world—a world in which there is universal coverage, consistent contributions of 9 percent of earnings (6 percent contributed by workers and 3 percent by employers), no early withdrawals, and no fees. In that world, retirement savings for the typical worker aged 55 to 64 would amount to $364,000.

But the world is not perfect. The results of the CRR analysis show that one of the biggest reasons retirement savings are falling short of their potential is the immaturity of the 401(k) system, which went into effect in the early 1980s. Consequently, the "relatively recent shift from traditional pensions to the newer 401(k) plans means that many of today's 60-year-olds did not participate in a 401(k) plan when they were young workers," explain the researchers. Another major reason retirement savings are not as high as they could be is the lack of universal coverage. Many employers do not provide their workers with the opportunity to participate in a 401(k) plan. Lesser reasons for the shortfall are fees and leakages.

Here is how each of these reasons reduces the $364,000 potential in retirement savings to a paltry $92,000...

IRA balance for typical worker aged 55 to 64
$364,000 potential in a perfect system
Reduced to $247,800 after accounting for the immature 401(k) system
Reduced to $136,200 after accounting for the lack of universal coverage
Reduced to $122,800 after accounting for fees
Reduced to $92,000 after accounting for leakages

Source: Center for Retirement Research at Boston College, Why Are 401(k)/IRA Balances Substantially Below Potential?

Is Gen X Prepared for Retirement?

The oldest Gen Xers—born in 1965—turn 55 next year. At that age, retirement planning shifts from serious to critical. How are Gen Xers doing as they prepare to cross the threshold into old(er) age? The 2019 Retirement Confidence Survey examines the generation's retirement readiness, and these are some of the findings...

• 59 percent of Gen Xers are confident they will have enough money to live comfortably in retirement, below Boomers (68 percent) and Millennials (67 percent).
• 65 percent of Gen Xers have personally saved for retirement, but only 31 percent have figured out how much money they need to save for retirement.
• 52 percent of Gen Xers have saved less than $50,000 for retirement.
• 31 percent of Gen Xers don't know when they will retire, 11 percent say they will retire at age 70 or older, and another 11 percent say they will never retire.
• 78 percent of Gen Xers plan to work for pay in retirement.

Source: Employee Benefit Research Institute, 2019 Retirement Confidence Survey Generation X Report

Feeling (Too) Upbeat about Retirement

Two-thirds of American workers (67 percent) are confident they will have enough money to live comfortably throughout their retirement years, according to the 2019 EBRI/Greenwald Retirement Confidence Survey. The percentage of workers who feel good about what lies ahead hasn't been this high since 2004—before the Great Recession.

But in reality, many workers may not be on track for a comfortable retirement. Nearly half (49 percent) have saved less than $50,000. Only 42 percent have saved $100,000 or more. These figures are low, in part, because many workers do not work for an employer who provides a workplace retirement savings plan. But even among workers with a workplace plan, just 51 percent have saved $100,000 or more. Despite meager savings, 82 percent of workers expect a workplace retirement savings plan to be a source of income in retirement, and 51 percent expect it to be a major source.

Savings of workers and spouses (excluding value of home and defined-benefit plans)
40% have saved less than $25,000
  9% have saved $25,000 to $49,999
  9% have saved $50,000 to $99,999
19% have saved $100,000 to $249,999
23% have saved $250,000 or more

Maybe workers need help with their retirement planning? Nope. Fully 65 percent are confident in their ability to choose the right retirement products or investments. When asked what backs up this confidence—what sources of information they use for retirement planning—the largest share of workers (29 percent) say they don't use any of the listed items—not their employer, not a financial advisor, no online calculators, no Google searches, no websites, no tips from family or friends. The 29 percent who say they use none of these things exceeds the 23 percent who say they use a professional financial advisor.

Source: Employee Benefit Research Institute and Greenwald and Associates, 2019 Retirement Confidence Survey

Reaching Out for Financial Advice in Old Age

Older Americans might be in trouble. They control a large share of the nation's wealth, yet many are not prepared to manage it. Cognitive abilities decline with age, and most older Americans eschew financial advice. Those are some of the findings of a National Bureau of Economic Research analysis of the 2016 Health and Retirement Study, a longitudinal survey of people aged 50 or older. NBER researchers added several questions about financial advice to the HRS, which also measures cognitive ability and financial literacy. The goal of the study was to determine how cognitive ability and financial literacy influence the quantity and quality of the financial advice sought by older Americans.

One of the study's major findings is how infrequently older Americans seek financial advice. Only 35 percent of respondents had reached out for guidance on handling their finances. Another major finding of the study: seeking financial advice is not influenced by cognitive ability or financial literacy. In other words, cognitive ability and financial literacy have no affect on the quantity of financial advice sought by older Americans.

The quality of financial advice is another matter. "More cognitively able and financially literate respondents tend to seek professional financial advice, rather than seeking casual help from family/friends," the authors report. Respondents with greater cognitive ability and financial literacy are more distrustful of financial advisors in general and especially wary of "free" financial advice from advisors who shroud their fees. The quality of financial advice is influenced by cognitive ability and financial literacy, the researchers conclude.

"Low cognitive ability and poor financial literacy can be a barrier to receiving quality financial advice," conclude the authors, "suggesting that researchers and policymakers may need to find new ways to evaluate and monitor financial behavior in an aging population."

Source: National Bureau of Economic Research, How Cognitive Ability and Financial Literacy Shape the Demand for Financial Advice at Older Ages, Working Paper 25750 ($5.00)

37% Retire Earlier than Planned

A substantial 37 percent of Americans retire before their planned retirement age, according to the Center for Retirement Research. The Center's researchers came to this conclusion after examining longitudinal data from the Health and Retirement Study for the years 1992 to 2012 to determine how many older Americans ended up retiring before their planned retirement age—one of the questions asked by the survey. The older the age at which people plan to retire, the more likely they are to retire before they planned...

Percent retiring earlier than planned
20% of those who planned to retire at age 61 or younger
26% of those who planned to retire at age 62
38% of those who planned to retire at ages 63 or 64
42% of those who planned to retire at age 65
55% of those who planned to retire at age 66 or older

What accounts for all these early retirements? Of the four factors considered by the researchers (health, employment, family, and financial), the most important is health. Absent health problems or a change in health status, the percentage who retire earlier than planned would drop from 37 to 32 percent, the researchers report. That's not much of a decline. In fact, the four factors considered by the researchers can explain only one-quarter of early retirements. What accounts for the rest? Perhaps "soft" factors, say the researchers, "like the lure of leisure time."

Source: Center for Retirement Research at Boston College, Retiring Earlier than Planned: What Matters Most?

Most Older Workers Experience Involuntary Job Loss

If you think you've got a retirement plan, think again. A study by the Urban Institute finds that more than half of older full-time workers—seasoned employees—are likely to lose their job before they turn 65, with dire consequences for earnings, household income, and retirement savings.

Examining Health and Retirement Study data from 1992 to 2016, the Urban Institute researchers tracked full-time workers aged 51 to 54 who had been with their current employer or self-employed for at least five years. Respondents were followed from their early 50s until at least age 65 to determine how many experienced an involuntary job separation—defined as an employer-related separation that resulted in at least six consecutive months of nonemployment or that reduced weekly earnings by 50 percent or more for at least two years.

Most of these seasoned older workers lost their job at some point during those years, with some losing a long-term job more than once. Fully 56 percent experienced at least one employer-related involuntary job separation. Demographics do not explain these derailments. There were few differences in the percentage of workers who experienced an employer-related job separation by sex, race, Hispanic origin, education, industry, or region of the country. Losing a steady job appears to be the norm for workers as they age.

The consequences of this kind of job loss are ugly. Only 10 percent of those who lost their job ever again earned as much as they had on the job, report the researchers. Median household income fell 42 percent after the job separation, with little difference in the extent of decline by demographic characteristic. At age 65, those who had experienced a job separation had a significantly lower household income than those who did not have a job separation, whereas the incomes of the two groups at ages 51 to 54 were essentially the same.

"Employment becomes increasingly precarious as workers age," conclude the researchers. "The steady earnings that many people count on in their 50s and 60s to build their retirement savings and ensure some financial security in later life can vanish, upending retirement expectations and creating economic hardship."

Source: Urban Institute, How Secure is Employment at Older Ages?

Retirement Readiness Lags, Especially for Hispanics

The retirement readiness of Americans took a hit from the Great Recession and has yet to recover, according to study by the Center for Retirement Research. CRR researchers assessed retirement readiness by race and Hispanic origin using the National Retirement Risk Index (NRRI) and found Hispanics to be worse off than Blacks or non-Hispanic Whites.

The National Retirement Risk Index is calculated by comparing a household's pre-retirement income with the income they are projected to have in retirement based on Social Security benefits, retirement savings, and the hypothetical annuitization of all their assets including housing. Households whose estimated retirement income falls at least 10 percent below their pre-retirement income are considered at risk of having insufficient funds to maintain their pre-retirement standard of living. CRR determined NRRI for households headed by 30-to-59-year-olds by race and Hispanic origin using data from the Federal Reserve Board's Survey of Consumer Finances. In 2016, 50 percent of the nation's households fell below the target, meaning half of households are at risk of not being able to maintain their current standard of living in retirement. The 2016 NRRI is lower than the 53 percent of 2010 but significantly higher than the 44 percent of 2007.

National Retirement Risk Index by race and Hispanic origin in 2016 (and 2007)
Total: 50% (44%)
Black: 54% (52%)
Hispanic: 61% (51%)
Non-Hispanic White: 48% (42%)

Regardless of race or Hispanic origin, more households were at risk of running short of money in retirement in 2016 than in 2007. But Hispanics were worse off than Blacks or non-Hispanic Whites, the CRR study found. "The deterioration for Hispanics reflects their buying housing in the wrong places at the wrong time," explain the researchers. Fully 40 percent of Hispanic households live in the states hardest hit by the Great Recession (Nevada, Florida, Arizona, and California) compared with only 20 percent of non-Hispanic White or Black households. Consequently, the value of the homes owned by Hispanics took a bigger hit, losing twice as much in value between 20017 and 2016 (41 percent) as the homes of non-Hispanic Whites or Blacks (21 and 22 percent, respectively). The stability in the NRRI for Black households, the researchers say, is due to Blacks' relatively low pre-retirement standard of living, which is easier to achieve in retirement because of Social Security's progressive benefit formula.

Source: Center for Retirement Research at Boston College, Trends in Retirement Security by Race/Ethnicity

Big Growth in 401(k) Balances

Consistency pays off. Workers who consistently participate in their 401(k) plan have seen their account balance grow rapidly over the past few years, according to an analysis by the Employee Benefit Research Institute.

EBRI tracked the account balances of workers who contributed (or their employers contributed) to their 401(k) plan in every year from 2010 through 2016 to determine how their accounts did over the time period. They did well. The average plan balance for consistent participants climbed from $75,378 to $167,330 between 2010 and 2016. That's a compound average annual growth rate of 14 percent. Here is how account balances grew over those years by age of worker in 2016...

Average 401(k) account balance of consistent participants in 2016 (and in 2010)
Workers in their 20s:   $34,956 (   $3,998)
Workers in their 30s:   $77,927 (  $21,804)
Workers in their 40s: $146,624 (  $57,117)
Workers in their 50s: $217,447 (  $99,388)
Workers in their 60s: $204,783 ($117,139)

Source: EBRI, What Does Consistent Participation in 401(k) Plans Generate? Changes in 401(k) Plan Account Balances, 2010—2016

Retirement Years Have Expanded. Now What?

"The expansion of retirement years has been one of the most profound societal changes of the past eight decades in the United States," write Eugene Steurerle and Damir Cosic of the Urban Institute. This expansion is straining the Social Security system's finances.

Since the Social Security program first began to pay benefits in 1940, the length of retirement (i.e., receipt of Social Security benefits) has expanded by more than a decade due to rising life expectancy and early claiming. If men and women today were to collect Social Security benefits for the same number of years as their counterparts in 1940, they would have to delay claiming their benefits until age 74 (men) or 75 (women). Instead, the average age of Social Security claiming is 64, with many claiming as early as age 62.

Although Social Security's full retirement age is rising from 65 to 67, the earliest age allowed for Social Security claiming (62) remains the same. The consequence is this: a woman retiring at age 62 in 2022 will receive Social Security benefits for 29 percent of her life and 58 percent of her adulthood. Such lengthy retirements are not financially sustainable.

"Reform must address the unavoidable question posed in the title of this brief," conclude the authors. How should Social Security adjust when people live longer?

Source: Urban Institute, How Should Social Security Adjust When People Live Longer?

Student Loan Debt, 1992 to 2016

The percentage of households with student loan debt has more than doubled in the past 24 years, according to an Employee Benefit Research Institute analysis of the Federal Reserve Board's Survey of Consumer Finances. In 2016, 22.3 percent of American households had outstanding student loans, up from 10.5 percent in 1992. The percentage of households with student loans increased substantially in every age group during those years...

Percentage of households with student loans in 2016 (and 1992)
Under age 35: 44.8% (24.4%)
Aged 35 to 44: 34.3% (11.7%)
Aged 45 to 54: 23.7% (5.7%)
Aged 55 to 64: 12.9% (2.9%)
Aged 65-plus: 2.4% (1.2%)

Among households with student loans, the median amount owed has more than tripled, after adjusting for inflation—rising from $5,363 in 1992 to $19,000 in 2016. In the 35-to-44 age group, debt has quadrupled...

Median amount owed for student loans by debtors in 2016 (and 1992); in 2016 dollars
Under age 35: $18,500 ($5,363)
Aged 35 to 44: $20,100 ($4,860)
Aged 45 to 54: $20,000 ($6,201)
Aged 55 to 64: $18,000 ($12,234)
Aged 65-plus: $12,000 ($10,223)

While households with and without student loans are equally likely to have saved in a defined-contribution retirement plan, those without student loans have saved much more. Among householders aged 45 to 54 with a college degree, those without student loans had a median balance of $126,000 in their defined-contribution retirement plan in 2016. Those with student loans had a median balance of $46,000.

Source: Employee Benefit Research Institute, Student Loan Debt: Trends and Implications

Student Loans = Less Retirement Savings

Do student loans prevent young adults from saving for retirement? Yes, finds a study by the Center for Retirement Research. Analyzing data from the National Longitudinal Survey of Youth, researchers at CRR examined differences in 401(k) participation and retirement plan assets at age 30 by student loan status at age 25 for the 1980 to 1984 birth cohort.

The findings: 1) Having student loans at age 25 had no impact on 401(k) participation at age 30, the study found. Among college graduates, 61 to 62 percent participated in a 401(k) regardless of student loan status or size of loan. 2) Having student loans at age 25 had a big impact on retirement plan assets at age 30. Those with no education debt had amassed $18,200 in retirement plan assets by age 30, while those with student loans had saved only half as much, regardless of the amount of debt. "The presence of the loan may be more important than the size of the payments," the study concludes.

Source: Center for Retirement Research at Boston College, Do Young Adults with Student Debt Save Less for Retirement?

Retirement Plan Participation Declining? No, says EBRI

The percentage of workers who participate in a retirement plan is declining, according to the Current Population Survey. Don't believe it, says the Employee Benefit Research Institute.

In an ongoing battle with the redesigned Current Population Survey, EBRI's Craig Copeland analyzes the supposed decline in retirement participation recorded by the CPS and argues that something is very wrong with the survey's data. Reporting on this problem has become an annual undertaking by Copeland. This is his third analysis since the CPS was redesigned, and no resolution seems to be in sight. The Demo Memo posts about his earlier reports can be found here and here.

According to the Current Population Survey, the percentage of full-time, full-year workers who participate in a retirement plan fell from 54.5 percent in 2013—before the CPS was redesigned to better capture retirement income—to just 41.0 percent in 2016. Among workers aged 55 to 64, participation fell from 57.1 percent in 2013 to 48.1 percent in 2016.

These figures are at odds with rising participation rates found in other government surveys, says Copeland, such as the Bureau of Labor Statistics' National Compensation Survey. Among private-sector workers at establishments with 500 or more employees, the NCS found a stable 76 percent participating in a retirement plan from 2013 to 2016. The CPS found only 47 percent participating in 2016 (after the redesign), down from 64 percent in 2013 (before the redesign). A study of IRS data confirms stability in retirement plan participation rather than the decline charted by the CPS.

"Rather modest modifications could be made within the CPS questionnaire along the lines of other federal government surveys to improve the retirement plan participation estimates," concludes Copeland. "Until that time, any person or organization using the data or those reading analyses from the CPS data need to be aware of the issues with the data. The estimates from the most recent surveys could easily be misconstrued as erosions in coverage, as opposed to an issue with the design of the survey."

Source: Employee Benefit Research Institute, Current Population Survey: Issues Continue for Retirement Plan Participation and Retiree Income Estimates

Age of Retirement Rising for College Graduates

The average age of retirement is rising among men, but the increase is almost entirely limited to those with a college degree, according to an analysis by Matthew S. Rutledge of the Center for Retirement Research.

Among men with a college degree, the average age of retirement climbed from 64.6 in the 1990s to 65.7 in the 2010s—an increase of 1.1 years. For men with no more than a high school diploma, the average age of retirement rose from 62.2 to 62.8 during the time period—an increase of just 0.6 years. Why is the rise so much smaller among the less educated? According to Rutledge's research, four factors are at work:

• Health disparities: Over the past few decades, the health of less-educated workers has improved less than the health of workers with a college degree. Consequently, the less-educated are more often forced by health issues to leave the labor force. 
• Defined-contribution retirement plans: Less-educated workers are less likely than the better educated to have a defined-contribution retirement plan. Thus, they lack the incentive to remain at work longer to build up their retirement funds.
• Early claiming of Social Security benefits: Less-educated workers account for most of those claiming early benefits, and this might make sense because of their lower life expectancy. "They tend to maximize their lifetime Social Security benefits by claiming before their FRA [full retirement age], and even as early as age 62."
• Marital status: Less-educated workers are less likely than college graduates to be married and thus they do not have the incentive to delay retirement until their (typically younger) wife reaches retirement age.

Source: Center for Retirement Research at Boston College, What Explains the Widening Gap in Retirement Ages by Education?

Expected Age of Retirement Now 66

On average, workers today expect to retire at an average age of 66—substantially higher than the expected retirement age of 60 in the mid-1990s, according to a Gallup survey. The percentage who expect to retire when they are 66 or older...

Percentage of workers who expect to retire at age 66 or older
2018: 41%
2015: 37%
2010: 34%
2005: 31%
2002: 21%
1995: 12%

Source: Gallup, Snapshot: Average American Predicts Retirement Age of 66

How Much Have Older Workers Saved?

Among the nation's workers aged 55 or older, a substantial 71 percent are "somewhat" or "very" confident that they will have enough money to live comfortably throughout their retirement, according to the 2018 Retirement Confidence Survey. There's a reason so many are confident: older workers have managed to boost their retirement savings.

The share of workers aged 55 or older who report saving little has fallen over the past few years, and the share who report substantial savings has increased, according to the survey. Fully 38 percent of workers aged 55 or older report savings of $250,000 or more in 2018, up from 25 percent in 2015. The percentage of older workers who report savings of less than $25,000 fell from 43 to 28 percent during those years.

Value of savings/investments of workers aged 55 or older, 2018
28% have less than $25,000
7% have $25,000 to $49,999
8% have $50,000 to $99,999
19% have $100,000 to $250,000
38% have $250,000 or more

These figures do not include the value of the primary residence. Older workers are now more likely to report having substantial savings ($250,000 or more) than little savings (less than $25,000), a crossover that occurred in 2017.

Source: Employee Benefit Research Institute and Greenwald and Associates, 2018 Retirement Confidence Survey

Many Retirees Don't Spend Down Their Savings

Here's how it's supposed work: save for retirement during your decades in the labor force, then spend down those savings in retirement. But that's not how it works for many Americans.

Retirees are loath to spend down their savings, according to a study by Sudipto Banerjee of the Employee Benefit Research Institute. Using data from the Health and Retirement Study, Banerjee examines changes in the non-housing assets of retirees during nearly two decades of retirement. He divides retirees into three groups based on the size of their pre-retirement non-housing assets, minus debt: Group A had non-housing assets below $200,000 (median of $29,975); Group B had non-housing assets between $200,000 and $500,000 (median of $333,940); Group C had non-housing assets of $500,000 or more (median of $857,450). Regardless of asset group, Banerjee finds the same phenomenon—the non-housing assets of retirees shrink far less than what is assumed by retirement models. After 17 to 20 years of retirement, Group A's non-housing assets had fallen by only 24 percent, Group B's by 27 percent, and Group C's by 12 percent.

Not only are retirees resistant to spending down their savings, a large percentage actually grow their assets in retirement. More than one-third of retirees, regardless of asset group, had larger non-housing assets after nearly two decades of retirement than they did at the time they retired.

Retirees are hesitant to spend down their savings for four reason: 1) uncertainty about future financial needs; 2) the desire to leave an inheritance; 3) not knowing the safe rate for spending down assets; and 4) behavioral habits—"After building a saving habit throughout their working lives, people find it challenging to shift into spending mode," Banerjee suggests.

Source: Employee Benefit Research Institute, Asset Decumulation or Asset Preservation? What Guides Retirement Spending?