Amid concerns of inflation and benefit cuts, a new survey by the Nationwide Retirement Institute highlights the lack of financial security facing retirees in 2024.
The study surveyed 1,000 U.S. consumers ages 60 to 65 regarding their concerns, expectations, and lessons learned for retirement planning, finding that one-third of current retirees in this age range have considered going back to work, with 50% citing fears of running out of money during retirement.
Most respondents (90%) pointed to inflation as their biggest threat, followed by cuts to Social Security benefits (84%) and Medicare/Medicaid benefits (83%).
Participants in the survey admitted having unrealistic expectations about the cost of basic living needs before retirement, with an average assuming to spend 42% of their income on food, housing, and other day-to-day costs. In reality, retirees tend to spend over half (53%) on basic necessities.
Nationwide noted other gaps between the realities of current retirees and the expectations of near-retirees: 77% of respondents said they expect to be comfortable in retirement, whereas only 68% of current retirees actually feel at ease.
Additionally, more retirees believe they’ll work longer than they actually do, with 64% of current retirees stopping work earlier than planned. While the average age people expect to retire is 67, in reality, people tend to retire at age 60.
Others anticipated higher Social Security benefits, as 36% say they received less in benefits than previously expected. Benefits could potentially reduce in the long-term, with data from the Social Security Administration forecasting a potential 23% cut in benefits for future retirees.
Seventy-four percent of current retirees and 71% of workers fear that potential Social Security cuts signify a looming lack of financial security, with only 41% believing it will remain unchanged, Nationwide reports.
“As we enter a period of peak retirement in our country, many retirees will face harsh reality checks if they missed opportunities to prepare for this moment,” said John Carter, president and COO of Nationwide Financial, in a statement. “For decades, millions of investors have focused on accumulation without a plan for how they will use that money to live in retirement. In the future, success will be determined based on whether or not retirees have enough income to cover their needs.
Nationwide cites a lack of professional resources for the unrealistic expectations, adding that just 37% of 60 to 65-year-olds worked on retirement planning with a financial advisor. Instead, most rely on the internet (39%), friends and family (35%), and resources from their employer-sponsored retirement plan (31%), to receive information.
“With fewer young people able to count on defined benefit pensions and uncertainty around the future of Social Security, younger savers should focus on simple things they can control right now to set themselves up for success in the future,” Carter continued. “There is reason to be optimistic, but retirement savers need to act now to ensure success.”
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Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.