Wisdom is often built on the foundation of regret. People learn from their mistakes. Just as important, though, you can learn from other people's mistakes.
Abigail Hurwitz with the Hebrew University of Jerusalem and Olivia S. Mitchell with the University of Pennsylvania's Wharton School sought to learn the financial regrets of older Americans. They interviewed 1,612 people, with the average age of the respondents being 71.4.
Here are the five biggest regrets of retirees based on Hurwitz's and Mitchell's research.
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1. Not saving more
The biggest regret by far for older Americans was not saving more. Over half (52%) of Hurwitz's and Mitchell's survey respondents expressed this regret.
Why didn't these older Americans save more earlier in their lives? The most common reason given (by 29% of respondents) was that they were living from day to day. Nearly as many (27%) said that they simply didn't plan ahead.
2. Not working longer
Hurwitz and Mitchell asked older Americans, "If you could do it all over again, do you think you would have worked longer, stopped at about the same age, or stopped working sooner?" A total of 34% answered that they regretted not working longer.
While this was a financial regret, there could be more to it than just money. A 2015 Bankers Life study found that 6 out of 10 retirees who continue working do so for non-financial reasons including staying mentally sharp and having a sense of purpose.
3. Not buying long-term care insurance
One-third of the survey respondents said that if they could do it all over again, they would buy long-term care (LTC) insurance, which helps cover the cost of long-term care and is less expensive the earlier it's purchased.
It probably shouldn't be surprising that this was a top regret of seniors. The U.S. Department of Health and Human Services estimated that 49% of men and 64% of women turning 65 in 2022 would need significant long-term care.
4. Not purchasing more lifetime income
The survey found 26% of respondents regretted not purchasing more lifetime income through a retirement annuity. This number included those who had not bought annuities, and those who had but wished they had paid more in premiums to increase their lifetime payments.
Women were more likely to regret not buying an annuity (64%, compared to 54% for men). As you might expect, wealthier individuals were less likely to regret not purchasing more lifetime income through an annuity.
5. Claiming Social Security benefits too early
Nearly one in five respondents (19%) regretted claiming Social Security retirement benefits too early. The older the respondents were, the more likely they were to express this regret.
The Social Security Administration reduces benefits for those who collect before their full retirement age. Claiming benefits at the earliest age possible (62) can lower a monthly benefit by 30%. On the other hand, holding off until age 70 to claim can boost the monthly benefit received by 24%.
What's the best age to claim Social Security from a financial perspective? A 2022 study published by the National Bureau of Economic Research found that 90% of Americans would receive higher lifetime Social Security benefits by waiting until age 70 to collect.
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