Money rules retirees wish they had followed when they were younger

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If retirees got a financial do-over, many would make different decisions — including starting to save earlier, maxing out retirement accounts and living below their means. 

A survey of 1,000 U.S. consumers age 60 to 65 by Nationwide Financial found they had a range of concerns, expectations and lessons about retirement planning. Many respondents emphasized the difference between what they had expected and what they actually experienced in their retirement years.

Almost one in four survey respondents (23%) said they didn’t expect to need as much money as they actually do. Nearly 1 in 5 (18%) said they wrongly assumed they could work for as long as they wanted to. 

The vast majority had tried-and-true advice for their younger selves: Start saving early (63%), start planning early (41%), don’t live above one’s means (34%) and create a budget (24%). 

Among the actions that were most beneficial to their retirement security, retirees cited working with a financial professional, starting to save early, maxing out retirement-plan contributions and taking advantage of automatic increases to those contributions. 

“Start saving early — that message can’t get through enough,” said John Carter, president and chief operating officer of Nationwide Financial.

Bad investments, extravagant purchases, tapping retirement savings early and waiting until after age 30 to start saving, on the other hand, were cited as moves that harmed retirement security the most. 

If Carter were to give financial advice to his younger self, he said he’d offer the same wisdom he tries to pass along to his children: Maximize contributions to your 401(k), Roth IRA and health savings account, and work with a financial professional.

“Max it, max it out, max it out,” Carter said. “I can’t say it enough. So many young workers are not contributing enough to get a company match to their retirement plans. That’s just missing out.”

Perception versus reality

The advice the survey respondents would give their younger selves highlights a gap between the realities faced by current retirees and the expectations of people age 60 to 65 who are still working. 

Current workers underestimate the percentage of income they’ll spend on basic living expenses in retirement. They expect to spend 42% of their income on food, housing and other basic expenses, while retirees actually spend 53% of their income on those expenses, the survey found.

A total of 77% of respondents who are currently working say they expect to be comfortable in retirement, while only 68% of current retirees actually feel comfortable, according to the survey.

More than two out of three current retirees (64%) stopped working earlier than planned, the survey found, which can affect what are often important years in which to save for retirement, Nationwide Financial said. The average age of retirement was 60, but the average age of expected retirement was 67. 

Another 36% of retirees said they received less than they expected in Social Security benefits. 

One way to plan for retirement is to visit to learn about your Social Security benefits and how much you’ll receive, depending on when you start taking benefits. You can take Social Security as early as 62, but you’ll receive more per month if you wait. For people born in 1960 or later, the full retirement age is 67. 

“You should know what your benefits will be,” Carter said, adding, “You should know that number before you retire.”

The health of Social Security should be on the radar of current and future retirees. If Congress does not take action to protect the program in the next decade, benefits will be cut by 23%.

Read: Social Security is now projected to be unable to pay full benefits a year earlier than expected

Nearly three in four current retirees (74%) said such a cut would impact their retirement “a lot,” with 71% of those still working saying the same. Only 41% of survey respondents expect Social Security to exist in its current form throughout their retirement.

Survey findings showed that just over one in three people age 60 to 65 (37%) get information about retirement planning from a financial adviser. 

Others rely on a mix of sources, including the internet (39%), friends and family (35%) and resources from their employer-sponsored retirement plan (31%). One in 10 older respondents has not sought out information about retirement planning at all. 

Nearly two in three retirees (58%) opted to draw on Social Security before their full retirement age, and one in three (34%) accessed their retirement savings early. Nearly one in five (17%) took out a loan from their 401(k), risking tax and other penalties. 

“One of the most crucial tasks of our time is to ensure American workers understand how everyday choices impact their financial futures,” Carter said. “It’s important for those preparing for retirement to have a holistic plan, addressing factors like the right time to take Social Security, costs of healthcare and long-term care, and ways to ensure they don’t outlive their income.”

This year is also the start of a period dubbed Peak 65, when the greatest number of Americans in history will turn 65 — an average of 12,000 per day.

Read: Home prices, auto loans and Social Security: More than 4 million people are turning 65 this year, and it will affect you

“For decades, millions of investors have focused on accumulation without a plan for how they will use that money to live in retirement. In the future, success will be determined based on whether or not retirees have enough income to cover their needs,” Carter said.

With fewer traditional pensions and continued uncertainty about the future of Social Security, younger savers should focus on simple things they can control right now to set themselves up for success in the future, Carter said.

“There is reason to be optimistic,” he said, “but retirement savers need to act now to ensure success.” 

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