While Many Pre-Retirees Plan to Work Longer, They May Underestimate Life Expectancy and Don't Have a Financial Plan in Place
SCHAUMBURG, Ill., Dec. 9, 2013 /PRNewswire-USNewswire/ -- Around 70 percent of pre-retirees plan to work longer in retirement, while only 37 percent of retirees took this approach to address retirement risks. These findings are one of several retirement planning issues covered in the Society of Actuaries(SOA) new research report, "2013 Risks and Process of Retirement Survey." The report provides insights on how Americans decide to retire and how they manage resources in retirement.
The online survey of retirees and pre-retirees from ages 45 to 80 provides a glimpse into individuals' financial approaches for retirement and it identifies gaps in retirement preparations. The biggest issues of concern for retirees include inflation, paying for health care and the risk of depleting savings. The survey findings include:
"The SOA report compares what individuals plan to do to in retirement versus the reality of what decisions retirees actually made," said actuary Anna Rappaport, FSA, MAAA, and Chair of the SOA's Committee on Post-Retirement Needs and Risks. "Many people may not be able to physically work full time into their later years, or they may be faced with unexpected risks and shock events impacting their savings and retirement income. While there is no one solution, individuals need to plan ahead for the multitude of probabilities, from how long they could live, to how much more money they or their spouse may need to avoid outliving their assets."
Rappaport noted, "What is also troubling is that many retirees end up retiring much earlier than planned. In the 2013 survey, pre-retirees expect to retire at a median age of 65, but the surveyed retirees had retired at a median age of 58."
Only 36 percent of the surveyed pre-retirees have a financial plan, compared with 67 percent of retirees who have a financial plan. Actuary Carol Bogosian, ASA, said, "It is concerning that a large amount of individuals do not have a financial plan before they reach retirement. Pre-retirees are obviously concerned about retirement issues, but more financial education and planning ahead for unexpected risks are all needed."
The surveyed retirees and pre-retirees had a median life expectancy of 85 to 89 years. However, there is a disconnection between how long pre-retirees expect to live and at what age their longest living family members reached.
Actuary Cindy Levering, ASA, EA, MAAA, said, "Nine percent of pre-retirees expect to live to age 91 or older. However, 48 percent of pre-retirees noted that their longest living family members reached age 91 or older. There clearly is a reality gap between pre-retirees' family history and the likelihood of living a long life. Either way, individuals still need to plan ahead for financial shocks."
For the full report, "2013 Risks and Process of Retirement Survey," visit www.soa.org/research/research-projects/pension/research-post-retirement-needs-and-risks.aspx.
About the Report
Developed by Mathew Greenwald & Associates on behalf of the SOA, "2013 Risks and Process of Retirement Survey" is the seventh survey series since 2001, and the first to be conducted exclusively online. The report results were developed from an online survey of 2,000 Americans aged 45 to 80, of which half were retirees and the other half were pre-retirees. The survey was conducted in August 2013, during a period of slowly recovering employment and housing values. Harnessing this survey research, the SOA will release retirement short reports in 2014 on personal risk management, the phases of retirement and issues for women in retirement.
About the Society of Actuaries
The Society of Actuaries (SOA) is an educational, research and professional organization dedicated to serving the public, its members and its candidates. The SOA's mission is to advance actuarial knowledge and to enhance the ability of actuaries to provide expert advice and relevant solutions for financial, business and societal problems. The SOA's vision is for actuaries to be the leading professionals in the measurement and management of risk. Visit http://www.soa.org.
SOURCE Society of Actuaries