Looking ahead to their retirement years, many investors see a future rife with serious financial concerns and somewhat diminished expectations, according to a recent
Selected survey findings
- The top retirement concerns among investors aged 21-50 are health care costs (76%), rising taxes (67%),
Social Securityavailability (63%), inflation (61%), long-term care (58%), living too long and running out of money (52%), and housing values (52%).
- Only 16% of investors expect to receive full
Social Securitybenefits as currently promised. The remaining 84% expect to receive no Social Securitybenefits (36%) or some form of reduced benefits when they retire (48%).
- When asked what they are doing differently to prepare for retirement as a result of this
Social Securityview, the most common responses among the 84% group were saving more (42%) and planning to work longer (29%); 13% said they are doing nothing about it, 11% said they are investing more aggressively, and 5% said they do not plan to retire.
- When asked for ways they are helping their parents or grandparents with financial matters, 19% of investors said they are providing guidance with daily expenses, 15% are providing general retirement planning guidance, 13% are providing direct financial assistance in meeting daily living expenses, and 9% are helping their elders better understand their
- For those who provide general retirement planning guidance, only 59% believe their parents or grandparents will have enough money to maintain their desired lifestyle; the remaining 41% believe their elders will not have enough money (26%) or are not sure (15%).
- "As this survey makes clear, investors are concerned about rising health care costs, and they should be. According to a report from the
Employee Benefits Research Instituteearlier this year, health care costs are the second-biggest expense for those aged 65 and older, behind housing, and it's the only spending category that steadily increases with age.1 Younger investors' fears about what health care costs might look like decades from now are completely understandable."
- "Not outliving one's savings should be the primary goal of any retirement planning strategy. Yet it seems that many people may be underestimating their longevity risk. An earlier study we conducted showed that the mean age at which people expect to retire is 62 and the expected number of years they will live in retirement is 22. Yet the chance that at least one member of a 65-year-old couple will reach age 90 is 45%.2 So for many people, the 'long term' may be longer than they realize."
- "The financial condition of the
Social Securitysystem has been widely debated for many years. The Social Security Trust Fund, which is where excess Social Securitytaxes collected over the years have gone, is projected by its Board of Trusteesto be depleted in 2033. At that point, Social Securitytaxes will still be collected from workers and payments will be disbursed to retirees, but most likely at a reduced level, estimated to be 75% of the designed benefit. This may be encouraging to the 36% of survey respondents who said they expect to receive no Social Securitybenefit. Still, it underscores the need for people to save at least 15% of their salary on their own and consider Social Securityto be only a complementary piece of their retirement income. I'm glad that 42% of people are saving more as a result of their skepticism, but I'd like to see that number be higher."
- "One of the perennial lessons younger investors can learn from current retirees is to save at least 15% and begin as early as possible. The ones who do are the ones more likely to enjoy the flexibility and lifestyle that financial independence can give you. Of course, the other half of the saving equation is spending in retirement. Spending must be prudent and a function of how much one has saved."
1 "Expenditure Patterns of Older Americans, 2001-2009," by
About the survey
The survey was conducted online within
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