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Global Atlantic Retirement Facts for NJ Residents

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(CNBNEWSNET)(February 20, 2019)--Global Atlantic recently published the findings of a national survey of over 4,000 Americans and how their expectations for retirement costs align with reality. In addition to the national data, the ten most populous states, including New Jersey, were oversampled, giving us a close look at the spending habits of Garden State residents.

Findings include:

  • Retirees in New Jersey spend 26% more than the average retiree in the United States ($2,540 vs. $2,008 a month).
  • More than one in four (27%) of NJ residents still have mortgage payments after retiring; the mortgage holders are spending, on average, 39% more than the typical American retiree with a mortgage ($1,838 vs. $1,021 a month).
  • Non-retired New Jersey residents (ages 40+) who have debt owe 25% more than the average non-retired American ($126,883 vs. $101,331, on average).
  • While the debt may seem concerning to some, retirees in New Jersey aren’t sweating it; only 11% regret that they didn’t pay down their debt before leaving the workforce.

Even with significant debt, New Jersey residents are big spenders, before and after retirement.

New Jersey retirees are spending significantly more each month, on average, than eight out of ten of the oversampled states; they spend 26% more than the average retiree in the United States ($2,540 vs. $2,008 a month). California is the only other (of the ten oversampled) to spend more, on average ($2,575 a month).

Why is it so expensive to live in New Jersey? Housing is a big factor in the high cost of living for retirees. More than one-fourth (27%) still have mortgage payments after retiring. These mortgage holders are spending, on average, 39% more than the typical American retiree with a mortgage ($1,838 vs. $1,021 a month). On average, those who rent spend 35% more a month than the typical American retiree who rents their home ($1,020 vs. $753 a month).

Retirees in this state are also outspending their national peers on leisure activities, such as travel, vacation, and dining out. However, about three in ten (29%) in this state reduced charitable giving in retirement.  On average, New Jersey retirees give $163 monthly to charity while in retirement, 4% less than New Jersey residents ages 40 and up not in retirement ($170 monthly).

Further data on spending in retirement is outlined in table 1.

Screen Shot 2019-02-20 at 15.45.54Retirement Surprises, Regrets and Lifestyle Changes

Retires in New Jersey are less remorseful with their retirement planning than their national retired peers, but like their peers, their biggest regret is not saving enough.

Less than half of all retirees in New Jersey (48% vs. 55% retired nationally) have retirement planning regrets. About one-third (32%) say their biggest disappointment is not saving enough (vs. 36% retired nationwide), followed by relying too much on Social Security (13% vs. 20% retired nationally).

Impact of high tax bills in retirement was the biggest unexpected cost for retirees in New Jersey; this is more than national retirees, but New Jersey retirees are less surprised than their national counterparts by the effect of high price inflation on retirement.  Financial surprises in retirement are common for 60% in this state (vs. 58% retired nationally). The biggest surprise was high tax bills (24% vs. 15% retired nationwide) and the increase in housing and day-to-day living costs (23% vs. 32% retired nationally).

More retirees in New Jersey minimized their donations to charity than their national retired counterparts but were less likely to cut back on discretionary expenses, like restaurants and entertainment.  More than one-third of New Jersey retirees are cutting back on restaurants and entertainment expenses (38% vs. 47% retirees nationally), followed by minimizing spending on travel and vacation (35% vs. 38% retired nationally).

Understanding retirement decisions - see table 2.

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Most retirees in New Jersey rely on their Social Security, a savings account, and a pension plan; many retirees in New Jersey also have a 401(k) defined contribution, and an investment portfolio.

Social Security is the leading income stream for New Jersey retirees (86% vs. 83% retired nationally), and more than six in ten (65%) have a pension plan (vs. 43% retired nationwide), followed by 57% in this state with a savings account (vs. 52% retired nationally); an investment portfolio (39% retirees in New Jersey vs. 30% retired nationwide); 401(k) or other defined contribution (37% retirees in New Jersey vs. 26% retirees nationally).

More retirees in New Jersey than their national peers feel they retired at the right time; New Jersians are also more confident in their financial future than retirees nationwide.  All things considered, more than seven in ten retirees in this state (73% vs. 66% retired nationally) say they retired at the right time, and 25% said too soon (vs. 30% retired nationally); just 2% of New Jersey retirees say should have retired sooner.

Financial preparedness is more common for New Jersians ages 40 and up not in retirement than their national non-retired peers. Most residents 40 and up in New Jersey not retired have income contributions going to Social Security (78% vs. 69% nationally pre-retirees), and 76% pre-retirees in this state have a 401(k) or other defined contribution plan (76% vs. 66% of their non-retired national peers) they allocate income towards.

More pre-retirees ages 40 and up in this state than national pre-retirees also have a savings account (60% vs. 54% national); pension plan (48% vs. 34% national), an investment portfolio (35% vs. 28% national), and annuities (20% vs. 12% national).  More in this state than not retired have a pension plan (46% vs. 34% not retired nationwide).

Retirement assets/income streams - see table 3

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Most New Jersians ages 40 and up not in retirement say they are on track for retirement, but more of their national non-retired peers believe retirement planning is more difficult than it was for their parents’ generation.

More than two-thirds (69%) of non-retired New Jersians, age 40 and up are on track for retirement, and most understand the importance of generating enough income to cover basic living expenses, such as housing, food, and transportation in retirement.  When asked how they rate the importance of generating retirement income on a scale of 0 to 10 (where 0 is not at all important, and 10 is extremely important), 53% of New Jersians and 49% nationally not retired gave a rating of 8 or higher.

More than half of all not retired in New Jersey believe retirement planning is more difficult than it was for their parents (53% vs. 49% not retired nationally); 28% think it is the level of difficulty; 13% say easier; 7% not sure.

More pre-retirees in New Jersey ages 40 and up their counterparts nationally not retired, feel retirement planning is more difficult than it was for their parents (53% and 49%).  Pre-retirees in this state who think retirement planning is more difficult blame this to high health care costs while in retirement (63%, on par with pre-retirees nationally), followed by a high cost of living and desired lifestyle in retirement (62% vs. 57% pre-retirees nationally).

Notably, more pre-retirees in New Jersey than their national peers blame longer life expectancy (59% vs. 46% pre-retirees nationally); expect to retire at an older age (42% vs. 38%).  These New Jersians hope to retire at age 65, compared to 64 mentioned by their non-retired national peers.

Retirement planning - see table 4.

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Debt plagues New Jersey residents.

Among non-retired New Jersey residents ages 40 and above who are in debt (73%), they owe 25% more than the national average of pre-retirees ($126,883 vs. $101,331, on average).

While less than half (43%) of non-retired New Jersey residents ages 40 and above have mortgages, those who do have higher balances than their counterparts in other parts of the country ($185,570 vs. $134,779 national average).  

Student loans also have a significant impact on borrowers. While New Jersey pre-retirees are roughly half as likely as the national average to have debt for their or their children’s education, those who do have student loans have 89% more than the national average ($44,864 vs. $23,794 pre-retirees nationally).

While the debt may seem concerning to some, New Jersians aren’t sweating it; only 11% of New Jersey’s retirees regret that they didn’t pay down their debt before leaving the workforce.

Further data on pre-retiree debt is outlined in table 5.

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