The Employee Benefit Research Institute (EBRI) is a non-partisan research group that examines how employee benefit programs affect the lives of U.S. workers, retirees and their families. They conducted a survey in 2020 to study the spending patterns of American retirees. In 2022, they conducted the survey again to see if and how those patterns had changed due to the pandemic.
What They Found
More than half of the nearly 2,000 respondents said they retired earlier than they expected to. Nearly 30% found themselves financially secure enough to do so, and 21% retired due to a non-COVID-related disability or health problem.
For 70% of respondents, Social Security was a major source of income.
Roughly 50% of respondents spent less than $2,000 per month, a third spent between $2,000 to $3,999 monthly and 16% spent between $4,000 to $6,999 each month. Only 3% of respondents claimed to spend more than $7,000 per month.
Overall, survey participants said their largest monthly expense — nearly one third of their income — went to their housing, including mortgages, rent and repairs. Their second largest expense was food.
In 2020, 17% of respondents said their spending was higher than they could afford — in 2022, that segment jumped to 27%. The increase is highest among Black and Hispanic populations, as well as lower-income households and those with poor health conditions.
While not all respondents reduced their spending in 2022, 90% of those who said they did were worried about inflation.
Almost 70% of participants had three months of accessible emergency savings put aside. That percentage is much lower in Black, Hispanic, lower-income and poor health households.
When asked in 2020 how satisfied they were in their retirement, respondents put their satisfaction at 7.4 out of 10. In 2022, the satisfaction rate dropped down to 7.
The lowest sense of well-being in 2022 came from:
- Those without defined retirement benefits or annuity income
- Those with little financial knowledge
- Those without a trusted financial advisor
- Single respondents
What Does the Survey Mean for You?
The upheaval of COVID-19 ushered in a period of inflation. That inflation, rather than the pandemic itself, affected spending habits the most. The EBRI’s Retirement Spending survey is a timely reminder of the importance of being adequately prepared for your retirement because inflation isn’t limited to global pandemics.
You should consider creating a comprehensive but flexible retirement plan, which you can adjust as needed. Find out how much you’ll need to retire, so you can be proactive in your investment efforts.