Why Half of Retirees Underestimate Their Pension

Planning for retirement requires special attention during the final years of one's professional career, according to the latest annual survey by DREES on the reasons for retirement. 

According to this study, insured individuals begin thinking about retirement an average of 4 years before they actually begin receiving their benefits.

However, despite this preparation, only 46% of new retirees who claimed their benefits between June 2019 and June 2020 receive a pension that matches their expectations, even though 72% say they had a precise or approximate idea of the amount of their future pension. The discrepancy between expectations and financial reality affects 20% of retirees, who receive less than they anticipated, and 7%, who receive more than they anticipated.

More than half of these new retirees thus misjudged the amount of their future pension, according to the DREES, which identifies three main reasons: the amount of information they received, the complexity of the calculation rules in the pension plans to which they belong, and individual circumstances. The risk of underestimation is also higher for individuals with multiple pension plans, who are enrolled in several different plans.

Significantly, the DREES notes that the initial overestimation of pension benefits frequently leads to a decline in satisfaction levels upon retirement. According to the survey, 36% of new retirees see their satisfaction levels increase after retirement, while they decline for 28% of them and remain unchanged for 36%.

Furthermore, among new retirees who reported a high level of satisfaction before retirement, 55% experienced a decline in satisfaction upon retirement, while 49% reported that their satisfaction remained stable. In hindsight, 21% of new retirees would have preferred to retire later in order to receive a higher pension; this figure rises to 39% among those who had reported a high level of satisfaction before retirement.