Data and Research

Retirement Savers Should Plan for 'Financial Shocks' in Retirement

Nearly three-quarters of retirees surveyed experienced at least one financial shock.

By Lee Barney | October 11, 2016
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Nearly three-quarters (72%) of retirees experienced at least one financial shock, and for one-third of them, it depleted their savings by 25%, according to the Society of Actuaries’ (SOA) 2015 Risks and Processes of Retirement Survey.

Twenty percent of pre-retirees and 30% of retirees said that if an emergency were to arise, they could spend up to $25,000 without jeopardizing their retirement security. However, 20% of both groups said they could only spend less than $1,000 on an emergency without putting a serious dent in their savings.

Fifty-six percent of pre-retirees said the debt they carry has either somewhat or greatly limited the amount they can save for retirement. By contrast, 56% of retirees said their debt has little or no impact on their lifestyle.

The survey also found that pre-retirees are more worried about expenses than retirees. Sixty-nine percent are worried about paying for long-term care, compared with 52% of retirees. Other concerns include: health care costs (67% versus 47%), maintaining a reasonable standard of living (63% versus 45%), running out of savings (62% versus 43%) and inflation (76% versus 66%).

Pre-retirees expect to live to age 85, but the latest SOA mortality data finds that a 65-year-old male will live to age 86.6, while a 65-year-old female will reach age 88.8. Nonetheless, 55% of pre-retirees and retirees do not expect to live that long.

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