Retirement Outlook Survey

retirement

retirement (Photo credit: 401(K) 2013)

Consumers have unrealistic expectations about when they will retire, how much money they will need in retirement and where that income will come from. A recent survey highlights the concerns of consumers in general:

Retirement Timing is Often Beyond Our Control 

The study shows that while nearly 3 in 4 pre-retirees are confident they will retire as planned, only 48 percent of actual retirees retired when they expected. Among the more than 1,300 people surveyed, including more than 700 retirees, 46 percent retired sooner than planned.

Although the primary reason was due to job loss (36 percent), health issues (17 percent) and family issues (12 percent), an additional 25 percent said they retired early because they just “didn’t want to work anymore.”

Retirement Expenses Don’t Add Up

Expectations about retirement expenses also don’t match reality.  More than half (52 percent) of pre-retirees expected expenses to decrease in retirement, when in fact 65 percent of actual retirees found expenses stayed the same or even increased in retirement.

The vast majority (77 percent) of retirees found that their general living expenses increased in retirement.  More specifically, retirees experienced increases in healthcare costs (41 percent), real estate related expenses (26 percent) and money spent on dependents (18 percent).

A small minority (15 percent) found that their retirement plan exceeded expectations and 12 percent had more money saved than they anticipated.

Retirees Rely On Uncertain Income Sources

Retirees surveyed estimate 44 percent of their retirement income comes from pensions and an additional 28 percent comes from Social Security. Conversely, pre-retirees predict over half of their retirement income will derive from sources subject to market volatility and vulnerable to rising interest rates, including qualified retirement plans (27 percent), IRAs (13 percent) and stocks and bonds (12 percent).

Compounding the problem, only 50 percent of consumers who work with financial professionals have a written plan for retirement.  And just two out of five have distribution plans for taking income in retirement.

From: Genworth

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