On average, the survey found, those nearing retirement (ages 50 to 70) aim to close a $250,000 gap before they can retire comfortably, and 68% percent plan to work after they officially retire. Still, the majority (78%) expect to be extremely happy after they leave the work force.
Nearly nine in 10 (88%) respondents said they feel comfortable navigating all of the resources available about retirement preparation. Seventy percent said they feel in control of their financial future, and 72% said their dream retirement includes really nice vacations.
However, more than one-third (38%) admitted they may not have an accurate understanding of what costs they will face in the future because that have not yet estimated their annual expenses in retirement. Less than half of respondents (46%) are extremely or very confident they will be able to afford essential expenses—housing, utilities and medical costs—in retirement. Just 38% feel confident in their ability to afford extras such as traveling and pursuing hobbies.
Respondents said they expect to need close to $1 million for a comfortable retirement (on average, $934,000), but their current investable assets, including employer-sponsored plans, are less than $700,000. One in five (22%) report they have less than $250,000 total saved for retirement.
“There seems to be a significant disconnect between the expectations that Americans have for their lifestyle in retirement and the financial steps they’re taking—or not taking—to make those expectations a reality,” said Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial.
Fewer than two-thirds (62%) of respondents claimed they have done everything they can to prepare for retirement, but de Baca asserted the survey found some good news: “There are several things that most people are doing right,” she said, “and there are steps that everyone can take to help build their financial readiness for retirement.”
Almost six in 10 (58%) said they could save more than they are putting away now, but only one-third (32%) said they feel afraid they are not saving enough.
Nearly half (47%) expect to use their home equity to help fund their retirement, but 37% of homeowners say they have not yet—or are not on track to—pay off their mortgage before they retire.
“The study reveals several action steps that those who feel the most confident about affording essential expenses in retirement have taken, including having a written financial plan, factoring inflation into their retirement plans and calculating how much income their assets will produce in retirement,” added de Baca. “These are actions anybody can take, even if they are maxing out savings or cannot afford to simply save more.”
When asked whether they worry more about their health or their finances in retirement, half of respondents admitted they are more concerned about their health (53%), while only one-third (35%) claimed their finances are more worrying. Five percent answered “both.”
Many of these may not understand the health care costs they will face in retirement, however. Fifty-six percent admitted they have not yet researched what Medicare covers, and the majority (69%) have not purchased long-term care insurance.
The Retirement Check-In survey was commissioned by Ameriprise Financial Inc. and conducted via telephone interviews by Koski Research between October 31 and November 14, 2012. The survey was conducted among a targeted sample of households and includes responses from 1,000 employed Americans ages 50 to 70 years old with investable assets of at least $100,000 (including employer retirement plans, but not real estate) who plan to retire at some point.