Survey Results For “The Retiree Next Door”


Today is the first day of FinCon14, and it’s also the launch of a free eBook on successful retirees!

Image of cover of The Retiree Next Door eBook | The-Military-Guide.com

Click here for your free copy!

The Retiree Next Door” is based on a survey of over 500 financially independent people who volunteered their advice. (Disclosure: I’m one of them.)

You’re going to learn good news about what works. You’ll read how we saved, invested, and planned for retirement during our working years. You’ll see how we live, earn, and spend in retirement. Best of all, over two-thirds of these retirees got there with less than a million dollars.

The eBook was inspired by Jeff Rose’s 2012 Roth IRA movement (yep, I was there) and it’s partnered with FinCon14. It was produced by MoneyTips.com and their financial professionals. They host a site of volunteer (free!) financial professionals to answer your questions about investing, loans, insurance, and retirement. (I’m spending the next three days at Fincon, and MoneyTips is here too.)I’ll write more about MoneyTips at the end of this post.

Golly, imagine if someone wrote a book about financial independence for military veterans and families. But I digress.

The retiree survey was designed by CFPs, CPAs, wealth managers, and personal finance bloggers. It was conducted during July-August 2014. 510 retirees self-reported (without verification) their situation and their advice. Over 80% of us are fully retired and in their 60s or 70s. (I’m one of the 6% in my 50s.) Over 70% have at least a bachelor’s degree. Only ~10 of us are military (2%) although 9% of American citizens are military veterans.

We retirees are in good financial shape. (Hey, we’re retired.) 25% have a net worth between $500K and $1M, and 44% have a net worth below that. 31% are millionaires. 40% of us are spending between $50K-$100K/year and only 27% spend less.

We largely saved and invested for our own retirement, and we’re spending it prudently. Only 10% are spending their assets faster than the safe withdrawal rate of 4% and only 13% received a financial windfall.

We’re living all over the country, and most of us have a spouse or significant other. Only 20% of us have kids or grandkids living in our house with us.

The retiree survey shows that this is not rocket science.

  • 92% are comfortable with their current standard of living.
  • 19% are certain they have more than enough assets to last a lifetime, even though…
  • 44% of retirees spend less than their monthly income.
  • 36% reduced their retirement living expenses, but…
  • 61% admitted to not spending frugally.

Over half of us have no financial worries! However many of us are concerned, too:

  • 48% are awake at night with financial worries.
  • 28% are concerned about outliving their savings.
  • 24% worry about healthcare expenses.
  • 22% aren’t sure they can maintain their standard of living.

We have a variety of ways of preserving our wealth. The most frequent responses were “Medicare” and “owning a car that’s at least two years old”. Yeah, I know, not much help there, but here are five other popular techniques:

  • 43% own their home outright.
  • 41% manage their own finances & investments.
  • 35% cut back on luxuries and extras (“cut back”, not “cut out”).
  • 34% collect passive income (interest and stock dividends).
  • 24% carry long-term care insurance.

Interestingly, only 17% continue to work and only 10% own rental properties. (I would have expected to see a lot more landlords.) Only 20% follow a retirement budget and only 18% downsized their homes in retirement.

How did we get here? No surprises– 35% were employed at a large company (or else that’s how the companies got to be large) and only 14% worked at a small company. 20% were in the public sector and only 14% were self-employed. Over half of us stuck to a budget, and 30% of us considered ourselves to be frugal. 67% also reported that we “spent enough to live comfortably”. Most of us didn’t even think about retirement until after our 30s, and over a third never even bothered to calculate how much we’d have to save to get there.

Here’s some more encouraging (shocking) news for young adults: over half of the retirees didn’t even start saving until they were in their 40s. However, if you expect to retire before age 65 then you’re going to have to start early or save a much higher percentage of your income. Of those who were saving in their 20s, 30s, and 40s the most popular number was 10%. However a substantial minority saved more, and a few saved a lot more.

Surprisingly, some of us did a bad job of investing for retirement:

  • 23% made regrettable investment decisions.
  • 14% made regrettable real estate or mortgage decisions.
  • 10% waited too long to start saving.
  • 10% lost money in their own businesses.
  • 7% spent too much and 6% didn’t save enough.

6% followed bad advice or paid high fees.

The “good” news is that we retirees made plenty of saving & investing mistakes (me included) and yet still managed to retire comfortably. Diversify your investments among low-expense passively-managed index funds, but don’t beat yourself up over a few mistakes— and don’t repeat them!

Want to learn more? Download the eBook.

MoneyTips.com is another way to learn a lot more for free. You post a question anonymously on their site, and one of their credentialed volunteer members posts an answer. You can take the info and run with it, or you can request a callback from their experts. You can also search their directory to find a professional in a particular field or in your local area.

This is a fantastic way to get credible answers to your questions, and it’s far better than your average Internet forum of anonymous posters. It’s also a great way to anonymously test-drive a financial professional to see whether you’d like to sign on with them.

How is MoneyTips at answering military financial question? Hmm. They don’t get many of those, although they discuss the basics of VA loans and student loans. Only one of the professionals listed on their site even mentions military service, although more of them may have served. I’m going to talk with MoneyTips at FinCon about military questions and helping servicemembers. I know a few CFPs who are military veterans and might be happy to help.

Related articles:
How Many Years Does It Take To Reach Financial Independence?
Questions On The 4% Safe Withdrawal Rate
Where are all the retirees? How do we ask for their advice?
The biggest obstacles confronting all retirees
How Should I Invest During Retirement?



WHAT I DO: I help you reach financial independence. For free. I retired in 2002 after 20 years in the Navy's submarine force. I wrote "The Military Guide to Financial Independence and Retirement" to share the stories of over 50 other financially independent servicemembers, veterans, and families. All of my writing revenue is donated to military-friendly charities.

8 Comments
  1. Just tried to download the book – they wanted quite a bit of personal info – I’ll pass. I have your book and others, as well as frequent several blogs and BBSs :-)

    Nevertheless, those stats are interesting – I fit in a few of those…

    The military stat sticks out to me. I’m a combination of military and other. Retirement is probably not the correct word anymore for me. Financial Independence are the words. I may still work, but I don’t have to and I curtail that work or do the type of work I want to do. Just like you and this blog, book, etc. This keeps you intellectually challenged and allows you to produce something of value to you and possibly(hopefully) society as you define it.

    However, most are still in the baby stages as your stats show.

    Thanks again for sharing…hope you are enjoying/enjoyed New Orleans. Great food!

    • Thanks, Deserat, I think you have a handle on it!

      I’ve learned that “financial independence” is a much better description than “retirement”. For example one of the founders of the “Retiree Next Door” sponsor company is definitely financially independent but does not feel the need to retire. He enjoys starting companies and will probably keep doing so as long as he’s able to.

      New Orleans food was excellent! I highly recommend Huck Finn on the edge of the French Quarter. Most of my time was spent indoors with the FinCon crowd eating the hotel food, though, so the company was much more memorable than the dining.

  2. I had the chance not too long ago to respond to a survey to feed into the Military retirement reform commission due to report out in February. They had a part at the end to make comments. I made the comment that I would be more than happy to wave or forgo for life any current and future CPI/COLA adjustments in retired pay for two conditions. Make all military retired pay exempt from Federal taxes, forever. And also transition all military retired into the Federal Employee retired health care system. This achieves two goals, forever severs the link and political football Tricare for the military retired community has become, and also and the use of COLA/CPI, chained or otherwise as a tool to hang over the heads of military retired. Just some suggestions, doubt very much they would gain traction. Would any other make that choice if so offered?

    • Thanks, Peter!

      I think the COLA is the most important feature of the military pension. I think it also delivers more income to retirees than a federal tax break. Besides all retirees will eventually face the CPI-COLA issue when they start drawing Social Security.

      I don’t know enough about the federal employee retired healthcare system to make a choice, but I have few complaints with Tricare Prime’s choice of civilian doctors. Perhaps the difference would largely disappear when both sets of retirees would move to Medicare.

  3. In response to the matter of LTC insurance. The biggest player in that market, Genworth is really in serious trouble as their business model brought in too little in premiums, and they are paying out too much in claims. The whole LTC market will change and morph over time as the Boomers age in and out (die) in the system, many commercial plans now currently marketed will blow up over time and I think once all said the govt. (medicare/ACA) will be very heavy player in that market.

    80% of all Medicare dollars are expended in the last 18 months of keeping people alive. The average stay in a nursing home/skilled care setting in about 9-12 month on average prior to death according to the actuarial tables used by SS. Cost of that year now averages 80-100K in 2014 dollars now. Do you have that amount in some liquid form or can make that from your own assets, self-insure? LTC is like bet, much like the “longevity insurance” deferred annuity product now marketed to the over 65, set that does not pay out until 85 or 90. Will you live long enough for it pay out, and what type and quality of life does one wish before and after one may need skilled nursing care. LTC makes sense if you come with family history of longer lives and/or genetic markers for dementia and/or other chronic conditions. And even the best LTC polices on the market only do 80/20 cost share. You still need to come up with 20% of institutional/long term care. Best LTC “insurance” on the market now. Its called the Dept of Veterans Affairs. One needs to get their VA benefits and disability claims, if any, in order first.

    • Good comments on the problems with long-term care insurance, Peter– I think it’s still at least 5-10 years away from dealing with the earlier flawed financial models.

      As for the VA claim, it’s better to have it done sooner rather than during the health crisis.

  4. Great comment, Mel!

    I don’t have the answers to those questions– we’re still assessing them ourselves. In our case, passive investments and automation seem to be more important than tweaking every last percentage point of performance. My spouse has also volunteered to take over the financial duties when I reach age 60, just so that she’s more familiar with the accounts & logins.

  5. Thanks Nords…some interesting stats, although sample size might be somewhat small. I also would have thought there would be a higher percentage of landlords (at least more than 10%).

    What was telling to me was how most of those surveyed didn’t really start saving/investing for retirement until after their 30s and a third didn’t give their “retirement number” a thought. I started an IRA when I was a 2LT but retirement wasn’t really in my mind…just sounded like it was a good thing to put money away (not to mention those monthly EE bonds purchase when I was an enlisted Soldier eons ago). It wasn’t until my wife and I were approaching 20 years in service (although I have calculated our NW since 2007) that we did some analysis regarding whether we can afford to retire early after our military retirement.

    Like you, we made some mistakes along the way (can you remember JDS Uniphase and Sun Microsystems?…as well as some actively managed front-loaded funds and inappropriate whole life insurance plans offered by a company “catering” to military personnel that used to be called USPA & IRA) but were able to chalk those up as expensive lessons that didn’t derail our retirement plans.

    I think the key takeaways are:
    – Live within or below your means
    – Save and invest at least 10% (more if you want to retire earlier)
    – Start NOW…even if you start late, there’s still a chance you’ll have a comfortable retirement down the road.
    – Educate yourself on managing your investments (i.e. low cost, well-diversified ETF or index mutual funds) and/or be involved in the management of your investments if you are outsourcing it to a trustworthy financial advisor/planner

    My concerns?
    – Is Long Term Care insurance (LTCi) right for my spouse and I?
    – Is our current financial and estate plans the best for our current situation…and/or will I need the assistance of a trustworthy CFP/planner to optimize it?
    – When I pass away (I am certain I will croak before my wife does), will my wife be as involved in effectively taking care of our assets and investments or will I have to arrange for a trustworthy planner to provide oversight?

    I’ve used bogleheads and sometimes Early-Retirement.org to pose financial/estate planning questions previously, and will probably add MoneyTips to that list. Thanks again.

    Comment? Question? What's on your mind?