EBRI Issue Brief

Retirees in Profile: Evaluating Five Distinct Lifestyles in Retirement

Apr 8, 2021 24  pages


As approximately 70 million Baby Boomers make their way into and through retirement, increased attention is being given to how they approach retirement spending as well as what constitutes a satisfactory lifestyle in retirement. One thing is clear: There is little homogeneity when it comes to the path retirees navigate. Factors such as available assets and income in retirement, debt, health status, marital status, and even gender impact retirement needs and outcomes. What are the common profiles of retirees, and what can we learn from them? Based on a survey of 2,000 retired households aged 62 to 75 and with fewer than $1 million in financial assets, the Employee Benefit Research Institute (EBRI) developed a series of “retiree profiles” based on retirees’ financial statuses, including the levels of financial assets, annual income, debt, and homeownership, in addition to a few spending-behavior factors. From there, we identified distinguishing characteristics — demographics, retirement income, debt, health insurance, long-term-care coverage, and spending patterns — of the retiree profiles. We also examined the spending-down strategies and plans used by each type of retiree. And finally, we looked at how retirees of different types rated their retirement life satisfaction. We found:

  • Average Retirees were more likely to report low levels of financial assets ($99,000 or less) and intermediate levels of income (between $40,000 and $100,000 annually), at 58 and 74 percent, respectively. They were more likely to be married than not, and they reported good health status on average. Just over half of Average Retirees thought they’d saved enough or more than enough for retirement. Six in ten Average Retirees seek to maintain or grow their financial assets in retirement. When it comes to sources of income, defined benefit (DB) plans play a major role for Average Retirees, along with Social Security. Nearly half had credit card debt, and almost as many also had a car loan. Half spend $2,999 or less monthly in retirement; 1 in 5 spends less than $2,000 in retirement. One in five Average Retirees spend 60 percent of their income on their home. The majority of Average Retirees tend to believe that their standard of living in retirement is unchanged from what it was during their working years. And the Average Retiree rates their level of satisfaction as 7.8 on a scale from 1 to 10.
  • Affluent Retirees were more likely to have high levels of financial assets ($320,000 or more) and income ($100,000 or more annually), the majority were mortgage-free homeowners with no debt, and the majority of those with debt reported it as easily manageable. This group had the highest likelihood of being married among retirement groups, with the majority of respondents being men, primarily having a college education or higher. The majority of Affluent Retirees believe they have saved enough money for retirement, and only 1 in 3 said they plan to spend all or significant portions of their retirement accounts. The retirees in this group also have access to more types of retirement income than the retirees from the other groups, with defined benefit pension plans and personal savings being the most commonly cited. Only 1 in 5 reported having credit card and auto loan debts. One in two reported spending between $2,000 and $4,000 a month, and 1 in 4 spends 25 percent or more of their budget on discretionary expenses. The majority think their standard of living hasn't changed, and nearly a quarter think their standard of living has increased since retirement. On average, retirees in this group were the most satisfied with their retirement of all retiree groups.
  • Comfortable Retirees were more likely to have intermediate levels of financial assets (between $99,000 and $320,000) and income. Thirty-seven percent had a mortgage, while 1 in 2 were mortgage-free homeowners. One-third reported no debt and 42 percent had an easily manageable amount of debt. Most of them were married and had a college degree or higher. Almost three-quarters said their retirement savings are sufficient or even above their needs, and more than half plan to grow, maintain, or spend only a small portion of their financial assets. In this group, more retirees cited workplace retirement savings plans such as 401(k) plans and individual retirement accounts (IRAs), in addition to Social Security, as their major source of income than any other group. Credit card and auto loan debt were the most common forms of debt, and 1 in 3 reported having at least one of these debts. Half of the retirees in this group spend less than $3,000 a month, while the majority said they can afford their current level of spending. In this group of retirees, most think their standards of living have not changed since their working years; however, 1 in 4 believes it has declined. Comfortable Retirees were on average the second most satisfied with their retirement life after the Affluent Retirees.
  • Struggling Retirees almost entirely had low financial assets (less or equal to $99,000), and 3 out of 4 had low income levels (less than $40,000). The share of renters in this group exceeds any other group at 44 percent. Only 1 in 2 was a homeowner and 1 in 4 did not have a mortgage on their house. There were only 1 in 5 reporting having no debt, while 45 percent had manageable debt and 20 percent had unmanageable debt. Female respondents made up the majority of respondents in this group, and the majority were from non-coupled households. Over two-thirds had no or some college education, and they also rated their health status the worst out of all groups. Three-quarters believe they had saved much less than was necessary for their retirement, and of those who have a financial account, most intend to spend down their accounts to zero or to a significant extent. Social Security provided the bulk of retirement income for the retirees in this group, and only 1 in 3 cited a DB plan as a major or minor source of income. Access to retirement income from other sources was the lowest in this group compared with all other retiree groups. This group had higher incidences of credit card debt (65 percent) and medical debt (25 percent) than any other. More than half spend less than $2,000 a month, and nearly half think they cannot afford their current level of spending. The majority of Struggling Retirees believe they have a reduced standard of living compared with when they were working. Retirement life satisfaction rates were the lowest in this group, with an average score of 5.8 on the 1-to-10 scale.
  • “Just-Getting-By” Retirees also mostly consist of the retirees with low levels of financial assets and income, but in contrast to Struggling Retirees, half owned their houses free and clear, while 30 percent rented and only 17 percent had mortgages. Also, 1 in 2 respondents reported no debt, while the majority of those who did report debt called it easily manageable. The demographics of this group corresponded to the Struggling Retirees group. There were more female respondents in this group than men, nearly two-thirds came from a non-coupled household, and only 30 percent had a college education or higher. But in contrast to Struggling Retirees, half believed they had saved enough for retirement, while the other half is split between those who think they have saved a little less than needed and those who believe they have saved much less than needed. Most of the retirees in this group relied on Social Security as a major source of income and over half cited personal savings as a major or minor source of income. Additionally, nearly a third mentioned DB plans and IRAs as a source of income. Compared with struggling retirees, a smaller share of retirees had credit card or medical debt (35 and 7 percent respectively). Seventy-five percent of this group’s retirees spend less than $2,000 a month, a higher percentage than in any other group, and nearly 1 in 5 devoted 60 percent or more of their budget toward their housing expenses. Almost one-third believe that their standard of living has decreased, while nearly half believe that it remains the same as when they were employed. These retirees scored better than Struggling Retirees on the retirement life satisfaction scale, averaging 7.2 out of 10.

EBRI was able to fund the development of this research thanks to a generous grant from the RRF Foundation for Aging.