While retirees have worked hard to save and invest, new research finds many aren’t tapping their retirement funds, and are wary of withdrawing them in the wrong way.
The study from Ameriprise Financial, Making Money Last, reveals that only 21 percent of retirees feel confident about drawing down their assets.
In fact, nearly seven in 10 respondents have not begun to withdraw their money aside from taking required minimum distributions.
Savings Shortfall—Perception or Reality?
Many respondents retired with a substantial amount of money—in fact, the median savings they had was $839,000.
However, for some retirees there’s a good reason behind their reluctance to spend. A quarter of respondents say they are not sure whether their money will last throughout their lifetime.
This feeling of uncertainty is underpinned by a savings gap between what some retirees thought they would need versus what they accumulated. The study reveals one in four retirees fell short of their savings goal by at least $250,000.
Not Outliving Money is a Top Priority
Whether they socked away the amount of money they desired or not, retirees are determined not to outlive the funds they accumulated. Managing investment risks and returns is the number one action retirees are taking to make their money last.
This is also a topic that 59 percent of retirees view as complex. Retirees are seeking professional financial advice as the second most common action, followed by reducing debt and doing research to become more knowledgeable about investing, which are tied as the third most common action they are taking to sustain their money.
Retirement Income—Social Security Questions Persist
Beyond savings and investments, most retirees say pensions (72 percent) and Social Security (71 percent) are important to their retirement income. In fact, 76 percent of those surveyed say they have started receiving Social Security and of these respondents nearly half (49 percent) claimed the benefit between the ages of 62 to 64.
Over a third (34 percent) of retirees who have not started collecting Social Security say they do not know when they will claim it, while 20 percent say they plan to receive the benefit between the ages of 62 to 64 and almost the same percentage of respondents (21 percent) say age 70 or older.
The Complexity Barrier
Over half of those in retirement (53 percent) feel understanding the tax ramifications of drawdown strategies is complex. Similarly, 46 percent of respondents express this sentiment when it comes to understanding how to establish a retirement income plan.