Data and Research

Long-Term Care, Inflation Worry Pre-Retirees

While these are still concerns of retirees, they are not quite as anxious.

By Lee Barney editors@plansponsor.com | June 29, 2016
Financial concerns worry both pre-retirees and retirees, although they weigh more heavily on the minds of pre-retirees, according to a survey by the Society of Actuaries.

Sixty-nine percent of pre-retirees, those workers age 45 and older, are worried about long-term care and inflation, followed by paying for health care (67%). However, among retirees, 58% are worried about long-term care, 52% about inflation and 47% about health care.

To manage these costs, nearly 70% of pre-retirees expect to work in retirement, and 46% expect to delay retirement. However, only 30% of current retirees have worked in retirement, and only 12% tried to postpone retirement.

“There is still a disconnect between what people think they will do in retirement to manage risks, compared to what approaches retirees actually used,” says actuary Cindy Levering.

Pre-retirees, on average, expect to live to age 85, although only 55% said at least one family member lived past age 90. Personal life expectancy is 10 years shorter than the age of their longest-living relative, according to 37% of pre-retirees and 28% of retirees. Only 33% of pre-retirees purchased or plan to purchase a guaranteed lifetime income product, and only 22% of retirees made such a purchase.

In terms of financial shocks that retirees experienced, No. 1 is home repairs (23%), followed by major dental expenses (24%) and medical/prescription expenses (20%). In terms of a planning horizon among pre-retirees, 38% have no such plan, 17% are looking out to the next five to nine years, and 19% are looking out to the next 10 to 14 years.

Among pre-retirees, the major forms of debt are mortgages (52%), credit cards (48%) and car loans (40%). Excluding their mortgages, pre-retirees are carrying an average of $30,000 in debt. Among retirees, 52% have less than $10,000 of debt.

Matthew Greenwald & Associates conducted the online survey of 2,000 for the Society of Actuaries.

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