The Retirement Income Study from Charles Schwab found one third of respondents (33%) say they have not yet determined what their essential living expenses in retirement will be and almost two thirds (64%) say they have less than one year of cash savings at any one time for retirement living expenses.
Forty-eight percent of respondents say that in their opinion, retirement means working part-time, or that there is no such thing as retirement.
The survey found that although most pre-retirees gave themselves and “A” or “B” grade on how prepared they are to pay themselves a monthly income in retirement, almost half would change something about how prepared they are.
The findings show:
• Forty-eight percent would change something about how they prepared financially for retirement;
• Less than one-third of respondents plan to have one year or more in cash savings for retirement living expenses;
• Almost one-in-10 pre-retirees have never rebalanced a portfolio;
• Thirty-two percent say they wish they had calculated needed retirement income sooner;
• Fifty-two percent have worked with a professional adviser to create a retirement income plan, and 25% would like professional financial advice to determine how much money they will need in retirement; and
• Over half of respondents have four or more financial accounts as part of their retirement income plan, yet two-thirds are not prepared to use one account from which to withdraw their retirement income.
“Saving for retirement is something most Americans know they have to do, but many people are confused, scared and literally frozen when it comes to flipping the switch from saving to withdrawing,“ said Carrie Schwab-Pomerantz, Charles Schwab senior vice president. “Our data shows that people even just a year or two away from retirement don’t know how to tap their savings effectively once they transition to retirement.”
Other key findings from the Schwab study show:
- One-third of those five years or less from retirement still need a retirement plan that incorporates all income and expenses
- Thirty-three percent of respondents have not calculated how much money they will need annually or monthly in retirement
- Sixty-four percent plan to have less than a year in cash at a time for living expenses
- Seventy-two percent expect to tap into their retirement savings principal, but one-third are not sure how to do it
- Thirty-four percent still need to determine how much money they will need on a regular basis and to develop a plan that incorporates all income and expenses
- Forty-five percent say the most difficult aspect of retirement preparation is knowing how to allocate savings and investments in retirement to maximize retirement income
- Forty-six percent of pre-retirees say their primary goal for their retirement savings is to receive a consistent amount of money each month
- Eighty-one percent of pre-retirees expect their expenses to decrease or stay the same in retirement
The online survey included 1,010 respondents in the U.S. ages 55-70 from August 25-30, 2011.
Click here to view the full survey findings.