Picturing retirement drives better outcomes
Participants who envision their ideal retirement save at a higher rate than participants who don’t know what their ideal retirement looks like.
Participants who picture retirement save more
The latest Lincoln Retirement Power® study revealed that participants who have spent a lot of time envisioning their ideal retirement set their sights higher when saving for the future. The median amount they think they need to save for retirement is 20% of their income, which is 7% higher than for those who haven’t given any thought to their ideal retirement.1
As a result, those who have a picture of what retirement holds for them are more than twice as likely to contribute 15% or more to their retirement plans compared to those who haven’t thought about it.
Specific goals provide motivation
It's important for savers to think about what they want to do in retirement. It gives them a goal to work toward and save for directly. 77% of retirement savers have thought about what their ideal — but still realistic — retirement may look like, including 34% who have given it a lot of thought.2
Envisioning the ideal retirement
Contribution vs. envisioning ideal retirement
77% of participants envisioned the ideal retirement. Of these participants who envisioned their ideal retirement, 43% thought a lot about it. 34% thought about it some and 23% have not. Of those participants who contribute 10% or more, 67% have thought a lot about their ideal retirement, 46% have thought about it some and 37% have not thought about their ideal retirement. Of those participants who contribute 15% or more, 48% have thought a lot about their ideal retirement, 25% have thought about it some, and 20% have not thought about their ideal retirement.
Naturally, the closer people are to retirement, the more they think about it. 68% of participants who plan to retire within the next two years have given it a lot of thought, versus 33% of participants who plan to retire in more than 10 years.3
What are ideal retirements?
When participants were asked to describe their ideal retirement in their own words, the most popular themes were traveling (35%) and feeling financial security/not having to worry about money (30%).4
Other common themes included:5
- Living comfortably/having a simpler life (16%)
- Being debt-free (12%)
- Relaxing/not having to work (11%)
- Relocating/downsizing a home (10%)
- Entertainment/fun activities/hobbies (9%)
- Spending time with family/friends (9%)
Calculating costs also increases deferrals
Envisioning the ideal retirement is an important step in planning for the future, but it’s also important for savers to calculate the costs of their ideal retirement, especially those who are nearing retirement. This Calculate Living Expenses worksheet may help.
Among those who expect to retire within the next 10 years, only 49% have calculated the costs of their basic needs in retirement, and even fewer (38%) have calculated what their ideal retirement may cost.6
Across all ages, only 27% have calculated what their ideal retirement may cost, and only 33% have calculated the cost of their basic needs in retirement.7
Calculating retirement costs
Has calculated or thought about cost of ideal retirement
Has calculated or thought about cost of basic needs in retirement
65% of participants have calculated or thought about the cost of their ideal retirement. Of these participants, 27% have tried to calculate the costs, 38% have not calculated the costs, but have thought some about the costs, 12% have not considered the costs, and 23% have never tried to envision their retirement. 75% of participants have calculated or thought about the costs of basic needs in retirement. Of these participants, 33% have tried to calculate the costs, 42% have not calculated the costs, but have thought some about the costs, and 25% have not considered the cost.
Like envisioning retirement, calculating retirement costs correlates with higher deferral rates among plan participants. Encourage participants to envision their ideal retirements and calculate potential costs so they can work toward specific goals and improve their retirement readiness.
See the latest survey results
Encourage positive action by helping participants focus on their retirement possibilities.