It’s yet another argument for the critical role 401k advisors play in the retirement readiness process.
The Society of Actuaries released its ninth biennial “Risks and Process of Retirement Survey” on Wednesday, “which identified an overall increase in the level of concern consumers have about their finances both prior to and during retirement in 2017.”
It found that inflation, health care and retirement costs rank as Americans’ top retirement concerns, consistent with the SOA’s 2015 survey.
Notably, a greater number of pre-retirees indicated they were “very” or “somewhat” concerned, compared to their retired counterparts for these categories.
Concern also increased from 2015 across all categories.
“Consumers face numerous financial risks as they head into retirement and financially plan for an uncertain timeframe,” Anna Rappaport, chair of the SOA’s Committee on Post-Retirement Needs and Risks, said in a statement. “I am encouraged to see pre-retirees and retirees alike taking steps to mitigate these risks, such as eliminating debt, saving money and cutting back on spending. But I am still concerned that there is not a greater focus on long-term planning, risk management, or dealing with the major uncertainties of life.”
“Elevated concern permeates the survey results,” the organization added, with a significant number of retirees and pre-retirees reporting that they feel unprepared to navigate financial shocks and unexpected expenses.
Fully 61 percent of pre-retirees and 47 percent of retirees feel unprepared for expenses in retirement that could deplete their assets.
When asked to estimate their own personal life expectancy, pre-retirees and retirees alike believe they will live to age 85, on average.
This means most consumers expect to spend at least 20 years in retirement, which the SOA notes is “a long and uncertain period of time to plan for financially, especially with finite financial resources to manage. Other retirees will outlive their assets, while a separate retirement concern for couples is ensuring their financial resources last for the partner that lives the longest of the two.”