NJ Residents are Big Spenders, Before and after Retirement

On Feb 19, 2019

The overall findings of a Global Atlantic survey reveal that even with significant debt, New Jersey residents are big spenders, before and after retirement. The survey of more than 4,000 Americans found that New Jersey retirees are spending significantly more each month, on average, than 8 out of 10 oversampled states; they spend 26 percent 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 percent) still have mortgage payments after retiring. These mortgage holders are spending, on average, 39 percent more than the typical American retiree with a mortgage ($1,838 vs. $1,021 a month). On average, those who rent spend 35 percent 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 percent) in this state reduced charitable giving in retirement.  On average, New Jersey retirees give $163 monthly to charity while in retirement, 4 percent 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.

Table 1- Monthly average spending on every day (discretionary) household purchases	National		New Jersey
	Retired	Not retired	Retired	Not retired
Mortgage on primary home	$1,021	$1,320	$1,418	$1,838
Rent on primary home	$753	$971	$1,020	$1,338
Vacation home or time-share	$457	$447	$549	$517
Household groceries	$297	$336	$302	$365
Property insurance for primary home	$204	$208	$301	$245
Travel	$264	$323	$287	$384
Out-of-pocket medical insurance costs, including disability	$246	$251	$265	$278
Utilities on primary home	$213	$246	$205	$255
Dining out at a restaurant or take out	$132	$173	$186	$210
Life insurance and long-term care	$149	$123	$175	$198
Home entertainment (TV, Cable, Netflix or other memberships)	$137	$150	$170	$164
Charitable giving	$170	$176	$163	$176
Out-of-pocket medical care	$89	$140	$137	$118
Transportation	$115	$182	$131	$201
Entertainment	$87	$122	$84	$101
Prescriptions	$58	$68	$70	$71
Recreation	$91	$104	$62	$101
Hobbies	$72	$87	$58	$141
Gym/exercise facility	$51	$58	$56	$62
TOTAL MONTHLY EXPENSES	2,008	2,933	2,540	3,374

Retirement 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 percent vs. 55 percent retired nationally) have retirement planning regrets. About one-third (32 percent) say their biggest disappointment is not saving enough (vs. 36 percent retired nationwide), followed by relying too much on Social Security (13 percent vs. 20 percent 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 percent in this state (vs. 58 percent retired nationally). The biggest surprise was high tax bills (24 percent vs. 15 percent retired nationwide) and the increase in housing and day-to-day living costs (23 percent vs. 32 percent 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 percent vs. 47 percent retirees nationally), followed by minimizing spending on travel and vacation (35 percent vs. 38 percent retired nationally).

Understanding retirement decisions – see table 2.

Table 2 – Understanding Retirement Decisions	National	New Jersey
Biggest retirement planning regrets
Not saving enough	36%	32%
Relying too much on social security benefits	20%	13%
Didn’t pay down debt before retiring	12%	11%
Biggest financial surprises
High tax bills	15%	24%
High price inflation (increase in housing and day-to-day living costs)	32%	23%
Drop in value of investments	9%	15%
Didn’t enlist help of financial planner early enough	8%	11%
Lifestyle adjustments after retired
Cut back on discretionary expenses, like restaurants and entertainment	47%	38%
Cut back on travel/vacations	38%	35%
Reduced charitable giving	25%	29%
Increased spending on healthcare	21%	16%
Moved to a less expensive home/apartment	17%	14%

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 percent vs. 83 percent retired nationally), and more than six in ten (65 percent) have a pension plan (vs. 43 percent retired nationwide), followed by 57 percent in this state with a savings account (vs. 52 percent retired nationally); an investment portfolio (39 percent retirees in New Jersey vs. 30 percent retired nationwide); 401(k) or other defined contribution (37 percent retirees in New Jersey vs. 26 percent 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 percent vs. 66 percent retired nationally) say they retired at the right time, and 25 percent said too soon (vs. 30 percent retired nationally); just 2 percent 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 percent vs. 69 percent nationally pre-retirees), and 76 percent pre-retirees in this state have a 401(k) or other defined contribution plan (76 percent vs. 66 percent 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 percent vs. 54 percent national); pension plan (48 percent vs. 34 percent national), an investment portfolio (35 percent vs. 28 percent national), and annuities (20 percent vs. 12 percent national).  More in this state than not retired have a pension plan (46 percent vs. 34 percent not retired nationwide).

Retirement assets/income streams – see table 3

Table 3- Asset/income streams	National			New Jersey
	Retired	Not retired	Retired		Not retired
Social Security	83%	69%	86%		78%
Savings account	52%	54%	57%		60%
Pension plan	43%	34%	65%		48%
Investment portfolio	30%	28%	39%		35%
401(k) or other defined contribution plan	26%	66%	37%		76%
Annuities	20%	12%	27%		20%
Part-time or freelance work in retirement	7%	–	8%		–
Other income	5%	6%	2%		2%

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 percent) 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 percent of New Jersians and 49 percent 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 percent vs. 49 percent not retired nationally); 28 percent think it is the level of difficulty; 13 percent say easier; 7 percent 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 percent and 49 percent).  Pre-retirees in this state who think retirement planning is more difficult blame this to high health care costs while in retirement (63 percent, on par with pre-retirees nationally), followed by a high cost of living and desired lifestyle in retirement (62 percent vs. 57 percent pre-retirees nationally).

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

Retirement planning – see table 4.

Table 4 – Planning for retirement among consumers ages 40 and up not retired	National	New Jersey
Retirement planning is more, the same level, or easier than it was for their parents
More difficult	49%	53%
Same level of difficulty	30%	28%
Easier	15%	13%
Not sure	6%	7%
Top reasons pre-retirees think retirement planning is more difficult than it was for their parents
High cost of healthcare while in retirement	63%	63%
High cost of living and desired lifestyle in retirement	57%	62%
Longer life expectancy	46%	59%
Negative outlook for Social Security long-term	49%	35%
Expect to retire at an older age	38%	42%

Debt plagues New Jersey residents.

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

While less than half (43 percent) 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 percent 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 percent 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.

Table 5. Pre-Retiree debt among ages 40 and up not retired	National	New Jersey
Credit card debt	42%	45%
Average ($)	7,435	9,142
Student loan(s)	14%	8%
Average ($)	23,794	44,864
Personal loan	18%	9%
Average ($)	7,220	16,456
Auto loan(s)	37%	29%
Average ($)	13,278	15,787
Mortgage(s)	46%	43%
Average ($)	134,779	185,570
TOTAL DEBT	74%	73%
Average ($)	101,331	126,883

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