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While many measurements of retirement readiness suggest that older Americans will fall short of maintaining their quality of life after completing their careers, the overwhelming majority of retirees (92%) report in surveys that they are either “moderately” or “very” satisfied.
This disconnect may mean that retirement satisfaction surveys may not be the most helpful tools for those seeking policy changes. The findings come from a new research brief from Boston College’s Center for Retirement Research (CRR), based on a paper published earlier this year.
“In fact, gerontologists and psychologists have found a weak correlation between older Americans’ financial circumstances and retirement satisfaction,” CRR explained. “These conflicting signals suggest that financial or life satisfaction questions do not provide a complete assessment of how retirees are actually doing.”
The researchers hope that this can serve as a first step toward a more comprehensive measurement of retirement satisfaction that takes financial factors into account. The task is to account for the disconnect between the stated levels of high satisfaction and the financial challenges older Americans commonly face when living on a fixed income.
“Objective measures of retirement well-being […] suggest that a large portion of retirees do not have the resources to maintain their pre-retirement standard of living,” the brief reads. “Indeed, to maintain their lifestyle, many retirees rely on credit cards and forego any financial buffer for emergencies.”
One potential explanation for the discrepancy is that retirees may not contemplate satisfaction in strictly financial terms. Surveys often include other facets of life beyond finances, including physical and mental health and their overall living situation.
Data from a pool of assessed surveys suggests to researchers that overall living situations are consistently reported with “fair” satisfaction. Health satisfaction is consistently described as “moderate,” while a high share of respondents report poor satisfaction with their mental health.
But retirement income questions tend to “elicit a relatively more pessimistic response,” CRR said. “Older adults also are more likely to report lower levels of financial satisfaction than life satisfaction.”
Overall, the findings illustrate that “the disconnect occurs because objective financial measures — such as income and net wealth — are poor predictors of older adults’ self-reported life satisfaction. Objective health and non-mortgage debt are slightly better predictors of life satisfaction.”
