When asked to list their greatest concerns about old age, current retirees surveyed by MassMutual typically cited issues related to deteriorating health, in particular the costs of their potential medical and long-term care needs. Although younger generations will also have to deal with such challenges, surveyed pre-retirees were found to be even more worried about simply affording retirement. Specifically, a 28 percent plurality of non-retired respondents said that their biggest old-age concern at the moment is not having enough money for an enjoyable lifestyle, and one in five surveyed pre-retirees reported that they worry the most about running out of money. More broadly, 78 percent of pre-retirees said that they are at least “somewhat concerned” about falling short on income in retirement, compared to just 69 percent for current retirees.
Similarly, only 8 percent of pre-retirees could confidently say that “my retirement income will last as long as I live,” versus 28 percent of current retirees. Doubts about the long-term availability of Social Security appear to be a part of the problem because 79 percent of surveyed pre-retirees reported being at least somewhat concerned about cuts to their government benefit, including 42 percent that are “very concerned.” On the bright side, such worries suggest that many pre-retirees recognize the important role self-funding will play in ensuring a comfortable and financially secure retirement. In fact, an earlier Bankrate poll found that 61 percent of working Americans expect Social Security to fund “little to none” of their retirement. Reducing one’s dependence of Social Security, though, is not always easy, and three-quarters of pre-retirees in the MassMutual survey admitted that they are worried about falling short on their retirement savings goals.
More than two-thirds of respondents also said that they are concerned about having to delay retirement for financial reasons. Fortunately, several savings tools exist to help Americans better prepare for old age, and perhaps the most popular is the 401(k) plan. Indeed, millions of workers have access to this tax-advantaged savings vehicle through their employer, and a growing number of participants receive an extra boost from company-provided matching contributions. MassMutual found that surveyed pre-retirees who consider themselves “very knowledgeable” about managing their savings and investments were more likely than “less knowledgeable” respondents to expect at least 75 percent of their retirement income to be generated by their 401(k) plan. Further, surveyed pre-retirees who avoid 401(k) loans, suspended contributions, and other “bad investment behaviors” were generally more optimistic about achieving their ideal retirement lifestyle.
Sources: MassMutual, Bankrate
Post author: Charles Couch