Only 4% of Retirees are “Living the Dream” — Evening Brief – 05.20.24
Most retired Americans are concerned that they do not have enough savings to see them through their golden years.
According to a new survey conducted by Schroders, a London-based asset manager, nearly 70% of Americans are anxious about outliving their assets. The report indicated that rising costs are “taking a toll” on retired Americans, with 89% of respondents worried that inflation may reduce the value of their assets.
“Whether it’s a trip to the gas station, grocery store or pharmacy, prices in the U.S. have increased noticeably in recent years, and that is particularly challenging for retirees living on fixed income sources,” said Deb Boyden, head of U.S. defined contribution at Schroders. “The challenges facing retirees today are further evidence of the retirement savings crisis.”
Meanwhile, 85% expressed concern about higher-than-expected health-care expenses. Nearly half (47%) of all retirees reported that their retirement expenses exceeded their expectations.
Furthermore, 76% of Americans were anxious about how a market downturn would affect their assets, while 69% were concerned about not knowing how to earn income or withdraw funds.
Some respondents’ health suffered due to their concern about assets and wealth, with 33% worried about how financial stress was affecting their overall health and another 26% lacking sleep over their financial status.
When asked to “describe their financial situation in retirement,” only 4% claimed they were “living the dream,” and another 4% stated they were “living the nightmare.” Almost half, 44%, characterized themselves as “comfortable,” with 34% saying they were “not great but not bad” and 15% saying they were “struggling.”
Most retired Americans, 58%, claimed they had “no idea how long their savings will last,” and 63% said they “wished they had done more planning prior to retiring.”
Many retirees (38%) utilize a pension plan or a spouse’s pension plan to produce income in retirement, while the remainder rely on a 401(k), 403(b), or 457 plan (22%) or a spouse’s 401(k), 403(b), or 457 plan (24%).
“The corporate pension plans that are being relied upon by today’s retirees may not be there for all retirees in future generations,” said Boyden. “This shift in how Americans will be meeting their expenses in retirement moving forward underscores the urgency for bolder actions from retirement savers, plan sponsors and asset managers.”
The findings are part of an annual retirement study done by 8 Acre Perspective on behalf of Schroders to assess the level of retirement readiness and the primary retirement worries of American investors. From March 15 to April 5, the firm polled 2,000 U.S. investors ranging in age from 28 to 79. The study included 498 retired Americans.