Are Defined Contribution Participants Delusional?

401k, retirement, stress, Transamerica

This guy's a mess of contradictions.

One in seven workers plans to live to age 100 or older, and workers overall estimate they’ll live to a median age of 90. However, only 18 percent are very confident they’ll fully retire with a comfortable lifestyle.

Those are the eye-opening findings from a new survey from Transamerica Center for Retirement Studies.

“Today’s workers are expecting to live long lives and, in doing so, they are disrupting retirement as we once knew it,” Catherine Collinson, president of TCRS, said when commenting on the report, titled Wishful Thinking or Within Reach: Three Generations Prepare for ‘Retirement. “The big question is whether their vision is wishful thinking or within their reach.” Many are envisioning retirement as a new chapter in life that involves continued work but with more free time to pursue personal interests,”

Travel (70 percent), spending more time with family and friends (57 percent), and pursuing hobbies (50 percent) top the list of workers’ most frequently cited retirement dreams.

A noteworthy three in 10 workers cite some form of paid work as a retirement dream, including pursuing an encore career, starting a business, and/or continuing to work in the same field.

The survey finds that more than half of workers expect to retire after age 65 or do not plan to retire and 56 percent plan to continue working at least part-time in retirement.

Among them, 83 percent cite financial-related reasons for doing so, while 75 percent cite healthy aging-related reasons, such as “being active,” and “keeping my brain alert.”

Fifty-seven percent of Generation X and 55 percent of Baby Boomers cite outliving their savings and investments as one of their greatest retirement fears. Forty-seven percent of Millennials fear that they will be unable to meet the basic financial needs of their family when they retire. Seventy-six percent of all workers are concerned that Social Security will not be there for them when they are ready to retire.

The Fragile Financial Well-Being of Workers

The survey’s findings illustrate the issues workers are facing:

Better Preparation Can Lead to Brighter Outcomes

“Despite the all-too-real challenge of saving, many workers are overlooking opportunities that may help them improve their long-term financial prospects,” Collinson added.

Specific missed opportunities include:

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