As life expectancies continue to climb, Americans are increasingly less confident that their savings will last through retirement.
According to the latest findings from Northwestern Mutual’s 2016 Planning & Progress Study, two-thirds of Americans believe there is some chance that they will outlive their savings, with one in three (34%) saying the likelihood is 51% or better. Fourteen percent think that outliving their savings is a definite (100% likelihood).
However, the study found Americans are not proactively addressing the financial implications of living longer. Only a fraction (21%) say they have increased their savings while more than four in 10 (44%) report having taken no steps at all.
The lack of preparation is particularly concerning given decreasing confidence about the future availability of Social Security. Only one-quarter of Americans (24%) say it’s “extremely likely” that Social Security will be there when they retire. Nearly three in 10 (28%) listed Social Security uncertainty among the greatest obstacles to achieving financial security in retirement. Just one-third of non-retired Americans (35%) expect that Social Security will be their sole or primary source of retirement income compared to nearly half of current retirees (49%).NEXT: Debt and health care costs a concern
For the second year in a row, health care costs (45%) emerge as a top-cited obstacle to financial security in retirement along with lack of savings (44%)—substantially ahead of lack of planning (30%), events in Washington, D.C. (23%) and volatile markets (22%).
"Interestingly, though people recognize the impact of health care costs and insufficient savings on retirement security, they are not necessarily seeing the role of financial planning as the connection between the two," says Rebekah Barsch, vice president of planning for Northwestern Mutual. "A solid financial strategy can ease both concerns."
The study also finds mounting debt is a serious source of financial pressure for Americans. When asked what one change would make the most significant impact on their financial situation, eliminating all debt (27%) narrowly outpaces earning significantly more income (26%). While mortgages emerged as the leading source of debt (29%), the impact of credit cards come through strongly (23%), exceeding student loan debt, car loans, and home equity loans/lines of credit combined.
The study was conducted by Harris Poll on behalf of Northwestern Mutual and included 2,646 American adults ages 18 or older who participated in an online survey between February 1 and February 10, 2016. The study report may be downloaded from here.