Many Retirees Spending More Than They Expected

However, retirees spend 32% less than non-retirees.

Thirty-nine percent of retirees are spending more than they had expected, according to the “Global Atlantic Retirement Spending Study: Perception vs. Reality.” Forty-nine percent of pre-retirees believe planning for retirement is more difficult for them than it was for their parents.

The typical non-retired U.S. consumer over the age of 40 spends an average of $2,993 a month, and retirees spend 32% less ($2,008), according to Global Atlantic Financial Group. The areas where retirees are spending less are entertainment (29% less), dining out (24% less), traveling (18% less) and housing (23% less on mortgage payments and 22% less on rent).

When a retiree has a pension, they spend 39% more than those without a pension ($2,379 vs. $1,709), and 20.5% less than pre-retirees. Retirees with an annuity spend 37% more than retirees without an annuity ($2,545 vs. $1,850) and 17.6% less than pre-retirees. The areas where the retirees with a pension or an annuity spend more are on rent, dining out and recreation.

“Many Americans adjust their lifestyles and cut spending once they see how quickly costs add up in retirement,” says Paula Nelson, president, retirement, at Global Atlantic Financial Group. “Our study indicates that while those with pensions and annuities still often make changes as they age, there isn’t as much of a need to drastically adjust their spending. This doesn’t surprise us, as guaranteed income beyond Social Security can help retirees maintain the lifestyles that they are accustomed to, even after they stop working.”

Asked to rate the importance of income to pay for basic living expenses in retirement on a 10-point scale, 56% of non-retirees give it a 9. Sixty-six percent think they are on track to generate enough income to meet basic needs in retirement.

Global Atlantic Financial Group asked retirees what their top three financial regrets are. They said not saving enough (36%), relying too much on Social Security (20%) and not paying down debt before retiring (12%).

Forty-two percent of those with an annuity have financial regrets, compared to 58% of those without an annuity, and 43% of those with a pension  have financial regrets, compared to 65% of those without a pension.

Global Atlantic Financial Group’s findings are based on a Echo Research survey of 4,223 people age 40 and older, conducted in September.