A new survey conducted by the Transamerica Center for Retirement Studies (TCRS) sheds light on the concerns of individuals aged 50 and above regarding their retirement. The findings reveal that less than 25% of workers or retirees in this age group are “very confident” about maintaining a comfortable lifestyle throughout their retirement years. For most respondents, their greatest fear revolves around the possibility of outliving their financial resources.
The survey, titled “Life in Retirement: Pre-Retiree Expectations and Retiree Realities,” is a part of TCRS’ ongoing Annual Retirement Survey. It delves into the retirement preparations and expectations of active older workers while comparing them with the experiences of retirees. Key areas of exploration include their perceptions of aging, retirement timing, life after work, and financial aspects.
Catherine Collinson, CEO and president of TCRS and the Transamerica Institute, emphasized the importance of financial preparedness in retirement. She stated, “Retirement brings freedom and time for pursuing personal passions. Our research finds that retirees are happy, purposeful, and have a positive view of aging. However, many are financially vulnerable and risk running out of savings. Their cautionary tale underscores the imperative for strengthening our retirement system.”
The survey uncovered that 45% of respondents aged 50 and over who are still working, along with 32% of retirees, expressed their greatest concern as the possibility of outliving their savings and investments.
Retirees also voiced significant apprehension regarding the future of the U.S. Social Security program. Approximately 42% of workers aged 50 and above fear that “Social Security will be reduced or cease to exist in the future,” while 39% of retirees share the same concern. Interestingly, both groups often cite Social Security as their primary expected source of income during retirement.
The survey also highlighted shifting retirement income sources. Nearly 19% of retirees anticipate relying primarily on income from company-funded pension plans, compared to just 10% of workers aged 50 and above. In contrast, 26% of older workers expect their primary income source to be from 401Ks, 403Bs, and IRAs, compared to only 11% of retirees. Surprisingly, 11% of older workers anticipate continued work as their main income source during retirement.
When considering home equity’s role in generating cash flow in later life, only 1% of respondents expect to rely primarily on home equity or an inheritance.
The survey results also emphasized common retirement planning mistakes to avoid, such as unrealistic retirement expectations, overlooking life expectancy as a planning factor, and claiming Social Security benefits prematurely. Other errors included neglecting health safeguards, inadequate long-term care planning, and not seeking financial advice, ideally from a fiduciary.
In conclusion, the survey’s findings underscore the importance of financial preparedness, particularly in the context of retirement. They highlight the need for a comprehensive approach to retirement planning, including a clear understanding of income sources, realistic expectations, and strategies to safeguard financial well-being in later life.
Source: Transamerica Center for Retirement Studies
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