During a recent webinar, Zahra Ebrahimi, a research associate at the Employee Benefit Research Institute (EBRI), took a deep dive into her organization’s latest white paper, “Retirees in Profile: Evaluating Five Distinct Lifestyles in Retirement.”

As the title suggests, the analysis offers a close look at the spending patterns and financial behaviors of retirees living in the U.S., grouping them according to the level of financial stability and confidence each feels. The white paper placed retirees into five categories: average retirees, affluent retirees, comfortable retirees, struggling retirees, and just-getting-by retirees.

Importantly, Ebrahimi pointed out, the data underpinning the analysis is based on a survey of retirees between the ages of 62 and 75, all with less than $1 million in available assets. She said other analyses conducted in this area are often done using a given provider or adviser’s book of business, where there might be major outliers on the upper sides of the wealth and age spectrums, which can in turn affect the final conclusions.

The broad strokes of the analysis might not be surprising to retirement industry practitioners. For example, the findings show that those with higher levels of credit card debt are more likely to be in a group that is outright struggling or just getting by in terms of funding their retirement. Those who are struggling are also much more likely to have significant medical debt—a type of debt that is not at all prevalent among the most financially confident and stable retirees. Ebrahimi noted there is also a clear trend that those who have had a divorce are more likely to be in the struggling or just-getting-by groups, a phenomenon that has been explored in other research.  

“There is little homogeneity when it comes to the path retirees navigate,” Ebrahimi explained. “Factors such as available assets and income in retirement, debt, health status, marital status and even gender impact retirement needs and outcomes.”

The EBRI paper says the “average retiree” group is more likely to report low levels of financial assets ($99,000 or less) and intermediate levels of income (between $40,000 and $100,000 annually), at 58% and 74%, respectively. They were more likely to be married than not, and they reported good health status on average. As Ebrahimi highlighted, just over half of average retirees thought they’d saved enough or more than enough for retirement, and six in 10 average retirees are seeking to maintain or grow their financial assets in retirement.

“When it comes to sources of income, defined benefit [DB] plans play a major role for average retirees, along with Social Security,” Ebrahimi said. ‘Nearly half had credit card debt, and almost as many also had a car loan.”

The majority of average retirees report their standard of living in retirement is unchanged from what it was during their working years, while the average retiree rates their level of satisfaction as 7.8 on a scale from 1 to 10, with 10 being the highest score.

“This is the largest group in the sample,” Ebrahimi said. “Their characteristics were close to the overall average person in the sample.”

Unsurprisingly, the groups identified as “affluent” and “comfortable” retirees were more likely to have higher levels of financial assets and incomes, and the majority of both groups were mortgage-free homeowners. Across both groups, but even more so among the affluent, these retirees had the highest likelihood of being married. The retirees in these group also have access to more types of retirement income than the retirees in the other groups, with DB pension plans and personal savings being the most commonly cited. 

Among the comfortable retiree group, more cited workplace retirement savings plans such as 401(k) plans and individual retirement accounts (IRAs) as important income sources, in addition to Social Security. Credit card and auto loan debt were the most common forms of debt, though only one in three reported having at least one of these debts.

As Ebrahimi explained, “struggling” and “just-getting-by” retirees also have their commonalities—namely lower assets and incomes, and higher amounts of debt of all types.

In the struggling group, only half were homeowners and only a quarter of those did not have a mortgage on their house. One in five report having no debt, while 45% have manageable debt and 20% have unmanageable debt. Female respondents made up the majority of respondents in this group, and the majority were from non-coupled households.

Unlike the affluent, confident, and average retirees, Social Security provides the bulk of retirement income for the retirees in the struggling group, while only one in three cited a pension plan as a major or minor source of income. The majority of struggling retirees believe they have a reduced standard of living compared with when they were working, and retirement life satisfaction rates were the lowest in this group, with an average score of 5.8 on the 1-to-10 scale.

The “just-getting-by” retirees also mostly consist of the retirees with low levels of financial assets and income, but, in contrast to struggling retirees, half own their houses free and clear, while 30% rented and only 17% had mortgages. Also, half of these respondents reported no debt, while the majority of those who did report debt called it easily manageable. Like the struggling group, most of the retirees in this group relied on Social Security as a major source of income, and over half cited personal savings as a major or minor source of income. These retirees scored better than struggling retirees on the retirement life satisfaction scale, averaging 7.2 out of 10.

Ebrahimi said there are clear takeaways that can be parsed from the data. For example, the highest level of educational attainment is a clear distinguishing factor among retiree groups. Most affluent retiree respondents (61%) held a college degree or higher, and more than a quarter (26%) were graduate-degree holders—the highest percentage of any group. In contrast, most of the struggling retirees and just-getting-by retirees had only a high school diploma or some college education.

Also, a person’s employment level prior to retirement is another important factor. Affluent retirees reported predominantly white-collar pre-retirement employment, defined in the survey as “executive, senior manager, mid-level or lower-level manager, professional or technical, administrative, and other white-collar employment.” Roughly three-quarters of average retirees and comfortable retirees reported have been employed in a professional capacity as well. In contrast, the two less confident groups were more likely to report blue-collar employment as their pre-retirement employment status.

The data shows health and wealth status are closely linked, too. Asked to rate their health status on a scale of 1 (poor) to 10 (excellent), struggling retirees scored the lowest (an average of 6) in terms of self-reported health status, followed by those who are just getting by, at 6.8. In comparison, average retirees, affluent retirees and comfortable retirees reported better health status, with average scores of 7 to 7.4.