The study, which surveyed 2,000 U.S. investors ages 28 to 79, including 498 retired Americans, finds that just 44% of Americans in retirement believe they have saved enough, while 24% are unsure and 32% remain convinced that the haven’t accumulated sufficient savings.
Ongoing inflation, along with retirement longevity, are among the top concerns that retirees face today. Eighty-nine percent of those surveyed said they are at least slightly concerned over inflation lessening the value of their assets, while 68% noted concerns of outliving assets. Others mentioned fears of higher-than-expected healthcare costs (85%), a major market downturn that would significantly reduce assets (76%), and not knowing how to best generate income and/or draw down their assets (69%).
The stress is even more cumbersome on retirees with fixed income sources, especially as day-to-day costs have risen strikingly in recent years, says Deb Boyden, head of U.S. Defined Contribution at Schroders. According to the data, 47% of all retirees surveyed say their expenses in retirement are higher than anticipated, with 49% initially believing that Medicare would cover most healthcare expenses.
Further, when asked to describe their financial situation in retirement, 4% say they are “living the dream,” 44% are “comfortable,” 34% are “not great but not bad,” 15% are “struggling,” and 4% are “living the nightmare.”
It’s no surprise then that Schroders finds that 58% of retired Americans say they don’t know how long their savings will last and 63% wish they had planned better prior to retiring.
“The challenges facing retirees today are further evidence of the retirement savings crisis. For younger generations with longer time horizons, now is the time to prioritize saving for a brighter future,” Boyden said.
Over a third of retirees surveyed use a pension plan (38%) or a spouse’s pension plan (34%), while 22% take their savings from a 401(k), 403(b) or 457 plan, and 24% utilize retirement vehicles from a spouse.
While retirees with a pension plan today could breathe comfortably with guaranteed income for life, Boyden warns it may not be the case for future generations, as more companies phase the defined benefit (DB) plan out of retirement benefits.
“The corporate pension plans that are being relied upon by today’s retirees may not be there for all retirees in future generations,” she said. “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. We can and should do more to improve the economic security of tomorrow’s retirees.”
SEE ALSO: