Data & Research January 17, 2018

Pre-Retirees and Retirees Express Concerns Over Retirement Readiness

Most are not currently consulting with a financial professional, but retirees report a moderate amount of interest and pre-retirees a high amount of interest in receiving support and education on a variety of finance-related topics.

Reported by

The Society of Actuaries (SOA) ninth biennial Risks and Process of Retirement Survey identified an overall increase in consumers’ level of concern for their finances both prior to and during retirement in 2017.

The survey revealed that inflation, health care and retirement costs rank as Americans’ top retirement concerns. Among pre-retirees, 78% selected inflation as a top concern, 74% chose health care, and 73% selected long-term care. Among retirees, the percentages were 57%, 54% and 59%, respectively.

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Many pre-retirees state they plan to take a number of steps to protect themselves financially as they age. Seven in ten (70%) state they intend to completely pay off their mortgage, including the 26% who have already done that. Fifty-eight percent have or plan to take less risky investments and 42% have or plan to postpone taking Social Security.

“I am encouraged to see pre-retirees and retirees alike taking steps to mitigate these risks, such as eliminating debt, saving money and cutting back on spending. But I am still concerned that there is not a greater focus on long-term planning, risk management, or dealing with the major uncertainties of life,”  says Anna Rappaport, fellow of the SOA and chair of the SOA’s Committee on Post-Retirement Needs and Risks.

A significant number of retirees and pre-retirees report that they feel unprepared to navigate financial shocks and unexpected expenses—61% of pre-retirees and 47% of retirees feel unprepared for expenses in retirement that could deplete their assets. For instance, according to the survey report, only one in three say they could financially handle a 25% drop in their home value, running out of assets or a family member needing financial support. While a majority feel they are prepared to handle small financial shocks, there are still a significant number who would have trouble dealing with car repairs or home repairs.

About half of pre-retirees (51%) say their savings are behind schedule, and one in three (33%) say they are on track.

Most are not currently consulting with a financial professional, but retirees report a moderate amount of interest and pre-retirees a high amount of interest in receiving support and education on a variety of finance-related topics.

The online survey of Americans ages 45 to 80 was conducted in July 2017 by Greenwald & Associates on behalf of the SOA.
Data & Research January 17, 2018

Some Millennial Retirement Expectations Unrealistic

One-third say they plan to save $200,000 or less to be comfortable in retirement; they only expect to live to age 81; and very few feel they will end up in an assisted living facility, according to a survey.

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A survey of Millennials, ages 21 to 37, finds 58% are saving for retirement.

Of those saving, 84% have saved less than $50,000, according to the survey by Aperion Care. Ten percent have saved in the $50,000 to $100,000 range.

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One-third (34%) of Millennials say they plan to save $200,000 or less to be comfortable in retirement. Only 20% of Millennials plan to save $500,000 to $1 million for a comfortable retirement, and only 15% plan to save $1 million to $2 million.

But, Millennials, on average, expect to live to age 81. And, while 61% expect to live to an older age than both their parents, nearly four in ten do not.

In addition, the majority (57%) of Millennials expect to die in their homes, rather than in a retirement community (4%), hospital (18%), hospice (4%) or assisted living facility (5%). Aperion Care notes that studies show only about 20% of people die in their own home.

Sixty percent of Millennials expect to be in an average financial state when they die, while 11% believe they will be poor. Forty-five percent say they will be in a better financial state than their parents, but 38% say they will be in the same financial state. Only 16% expect to be in a worse financial state than their parents when they die.

More results from the study may be found here.

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