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Retirement planning isn’t the most obvious hook for a love song. “We can rent a cottage in the Isle of Wight, if it’s not too dear,” sings Paul McCartney in the Beatles song “When I’m 64.” “We shall scrimp and save.” 

Things have panned out slightly different than McCartney, now 82, imagined. With a net worth of $1.3 billion, he’s pretty far from scrimping and saving. 

Surprisingly, while few 80-year-olds can say they’re that wealthy, many older folks in the U.S. say they’re not struggling financially either.  

In fact, three in four Americans who have retired (74%) say they have enough money to live comfortably. That’s according to a survey from Gallup, which has been tracking views on retirement in the U.S. since 2002.  

In contrast, the survey reveals that non-retirees are far less positive about the road ahead: less than half (45%) of this group say they’ll have enough money to live comfortably when they retire. 

What accounts for what Gallup calls “the disconnect between the retirement expectations of non-retirees and the more positive outcomes among those who are now retired”? In other words, why might many retirees be better off financially than they imagined? 

Reality vs. expectations 

Every April, Gallup surveys at least 1,000 U.S. adults 18 and older living in all 50 states, asking for their views on personal finance and the economy, including retirement.  

Gallup says the results have consistently shown a “retirement reality versus expectations gap” since it began collecting this information 23 years ago. “Non-retirees’ outlook has been consistently lower and subject to swings based on the national economic climate,” it said.  

For example, consider the views of retirees who are 65-80 today with the expectations of the same age group 20 years ago.  

Just over half of those who were 45-60 in 2002-2004 felt they would have enough money to live comfortably when they retired. But 79% of this same age group, who are now retired, say they have enough money to live comfortably.  

“For this age cohort of Americans,” Gallup said, “the reality has turned out to be significantly more positive than they anticipated two decades ago.” 

Social Security helps 

Undoubtedly, many retirees have lower living costs than when they were working. They may have downsized in retirement, for example, or relocated to a cheaper city or region. They may be finding that Medicare is covering more healthcare costs, too. 

However, Gallup highlights the “unanticipated value of Social Security in retirement” as a key factor. Data from 2019-2024 show that an average of 58% of retired Americans say Social Security is a major source of their retirement income, making it “the bedrock of their financial security.” 

In addition, most of those surveyed say they have major sources of income in addition to Social Security, which inevitably makes for a more secure financial position.  

Of those retirees who have at least one major income source in addition to Social Security, 78% say they are financially comfortable. And 82% of those who have three or more major sources of income in retirement (which may or may not include Social Security) say they’re financially comfortable. 

Falling through the gaps 

The survey’s findings present a rosy snapshot of retirement that may strike a chord with many of the 55.8 million people in the U.S. aged 65 and over.  

But there is a flip-side. Judging by the figures, one in four retired Americans (26%) may not have enough money to live comfortably.  

And while six in 10 retirees say they’re financially comfortable with Social Security as their only major income source, four in 10 say they’re struggling. That’s reflected in figures from the U.S. Census, which found that in 2021, roughly 8% of those 65 and above lived in poverty — that’s around 4.5 million people. 

So, what happens next?  

By 2050, it’s predicted that 22% of the population will be 65 and over. Couple that with a Social Security system that may not be able to pay in full in a few years, and the difficulties of saving for retirement amid a cost-of-living crisis, and it’s not hard to imagine many retirees facing a very different set of circumstances over the next 20 to 30 years. 

But one last note: Just as wealth is subjective, financial comfort is subjective. A cottage by the sea will be plenty for some, too little for others.  

If you’re worried about the cost of retirement, take a moment to consider the kind of lifestyle you’ll want in your later years, then use benchmark retirement saving guidelines to help plan for that, or speak with a financial adviser.  

Your future self will thank you, as McCartney sings, “many years from now.” 

© 2024 The Kiplinger Washington Editors, Inc. Distributed by Tribune Content Agency, LLC.