The key concern among retirees is having started too late or having invested too riskily, as the survey Putting the Retirement Pieces Together showed (download both papers from PROJECT M Research). One way to avoid such regret is to plan ahead.

And a little retirement planning brings more than just a warm, fuzzy feeling. Using rule-of-thumb saving patterns significantly increases retirement wealth as compared to the amount saved irregularly by workers without even a vague savings rule (Binswanger and Carman, 2009).

Satisfaction and increased savings are essential to comprehensively review retirement planning. While satisfaction is a subjective measure, looking only at the absolute size of one’s nest egg can be misleading as money spent, for example, on real estate can be well invested and contribute to overall retirement satisfaction. “It hints at whether people were able to spread their savings over their life course and are content with their wealth at the time of asking,” says Nies.

The study Why Saving on a Regular Basis May be Wise looked at data from more than 1500 affluent Americans between the age of 50 and 69 with investable assets of more than $250,000. Respondents indicated their satisfaction with their saving approaches on a scale from one (very satisfied) to five (very dissatisfied). The data was gathered by Allianz Global Investors and TNS Infratest in 2010.

VARIOUS SAVING APPROACHES clearly lead to different degrees of satisfaction with the outcome. Retirees who save irregularly are the most dissatisfied, closely followed by those without any saving rule. Individuals who have both a regular saving rule in place with additional irregular saving are the most satisfied, slightly before those with regular savings only.

“The results also show that retired individuals are more satisfied with their retirement planning than their working or semi-retired counterparts,” Nies reports. One reason for this may be the greater insecurity of working individuals about their future retirement. In addition, pre-selection affects results as people tend to retire once they have reached a sense of security. Generally, respondents with greater wealth and higher education levels were more satisfied with their planning decisions.

Yet, a degree of financial illiteracy can be noticed among affluent and educated baby-boomers. The survey included a rather simple question on inflation and a more difficult one on the costs of an annuity. Some 27% of respondents who answered both incorrectly, disregarding the “Don’t know” option, were in fact from the most confident group. In total, the 68% of respondents who failed to answer one question correctly were slightly more satisfied than individuals who answered both questions correctly.

Due to the study’s underlying dataset, only the younger baby-boomers are represented. Older retirees may have a different view, which is outside the scope of this study.