A pair of studies out this week reveals that Americans have a continued lack of confidence in retirement readiness.
The alarming aspect is that attitudes are trending worse. The Insured Retirement Institute’s latest research report that found less than a quarter of baby boomers, 24 percent, are confident they will have enough savings to last throughout their retirement years.
This is the lowest level since IRI began this research study in 2011, when 37 percent of boomers had this same level of confidence.
Connecting Americans with guaranteed sources of income that cannot be outlived, like annuities, continues to prove an elusive goal, IR leadership said.
“The road to a confident financial future begins with developing a holistic retirement plan,” IRI President and CEO Cathy Weatherford said. “Unfortunately most boomers are not taking important planning steps. Less than 40 percent have determined a savings goal, and just over a quarter are seeking help from a financial professional. Time is running out.”
The sixth annual study also found that this lack of confidence is understandable, given boomers’ readiness for retirement. Only 55 percent of boomers reported having savings for retirement. And nearly half of those with savings, 42 percent, have saved less than $100,000 – an amount that would generate less than $7,000 a year in retirement income.
Overall one in five Boomers are concerned they will not have enough savings to cover basic living expenses.
The IRI study offers some pointed tips for future generations, including gen Xers and millennials. The study found that boomers lacking confidence in their retirement security have some common regrets, with 68 percent wishing they had saved more and 67 percent wishing they started saving earlier.
Meanwhile, the Allianz Life 2016 Inflation Study conducted in March yielded a similar result. The study asked respondents how concerned they are about inflation damaging their retirement plans.
Nearly half of respondents reported being either “very concerned” (36 percent) or “terrified” (11 percent) that the rising cost of living will affect their retirement plans. Twenty-eight percent worried they won’t be able to pay for the essentials because of the rising cost of living.
That number jumps to 41 percent for those whose household income was less than $50,000. The study revealed that the majority (57 percent) of respondents plan to address rising costs by living more modestly in retirement.
“As consumers move into retirement, they will not only need to consider how to make their income last for 30 years or more, but also how it can cover rising costs driven by inflation,” said Katie Libbe, Allianz Life vice president of consumer insights.
Here are some additional insights from the IRI study:
- Only 22 percent of boomers are confident with their preparations for retirement, 27 percent are confident their savings with be sufficient to cover health care costs in retirement, and only 16 percent are confident they can cover the cost of long-term care.
- During the past year, 30 percent of boomers postponed their plans to retirement. About six in 10 boomers, 59 percent, now plan to retire at age 65 or later. This includes 26 percent who plan to retire at age 70 or later. In 2011, only 17 percent of boomers expected to retire at age 70 and beyond.
- If their financial resources become exhausted in retirement, 71 percent will try to cut back to rely only on Social Security, and 54 percent said they will try to return to work if able.
- Three in 10 Boomers stopped contributing to a retirement account, and 16 percent of Boomers took premature withdrawals from their retirement accounts.
- Nearly six in 10 boomers, 59 percent, expect Social Security to be a major source of income in retirement, up from 43 percent in 2014.
- Six in 10 boomers believe their retirement income will cover basic expenses as well as some for travel and leisure activities.
- Only 46 percent of boomers believe it is important to leave money to heirs, down from a high of 67 percent in 2013.
- More than eight in 10 Boomers who work with a financial professional said they are better prepared for retirement as a result.
- Sixty-eight percent of boomers who own annuities and 78 percent of boomers who work with financial professionals have at least $100,000 saved for retirement, compared to only 58 percent of all boomers.
- Of divorced boomers, 24 percent said being divorced will leave them worse off in retirement, and 23 percent said they will need to work longer as a result.
- More than six in 10 boomers, 62 percent, would prefer to meet with a financial professional in-person. An equal amount said they are unlikely to use an automated, online solution.
InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at email@example.com.
© Entire contents copyright 2016 by InsuranceNewsNet.com Inc. All rights reserved. No part of this article may be reprinted without the expressed written consent from InsuranceNewsNet.com.