One the one hand, more than 84% of investors say they have a retirement plan in place and 80% say they are confident about their financial readiness for retirement. However, when it comes to estimating how much money they will actually need once they retire, respondents say they’ll need on average around $66,000 in income annually, far lower than their current average income that is approximately $115,000.
“Everyone’s retirement saving and investing plan is going to be unique, but each plan needs to start with a realistic assessment of personal situation and goals,” said Carrie Schwab-Pomerantz, senior vice president with Charles Schwab & Co., Inc.
The survey also finds that, on average, respondents plan to work until they are 67 years old and expect to live to the age of 86, suggesting that they anticipate living off their retirement savings for less than 20 years.
Thirty-three percent of affluent investors feel they are completely prepared for retirement, and another 51% feel at least moderately prepared.
People’s sense of retirement readiness seems to provide flexibility in terms of whether or not they will continue working to drive additional income once they retire. Thirty-nine percent of people surveyed say they do not plan to work at all in retirement, and 46 percent say they might work part-time even though they expect to have enough money to live without working. Just 10 percent think they will have to work at least part-time to make ends meet.
When asked how their confidence level has changed since last year, 23% indicated they feel more optimistic about being prepared for retirement, while 24% are less optimistic, and roughly half (52%) have not changed their perspective. Survey respondents did express some financial worries when it comes to retirement planning. More than half (53%) say their primary concern is incurring unexpected expenses in retirement, such as medical or healthcare costs.
“Even with Medicare benefits, a 65-year-old couple could need nearly $400,000 to cover out-of-pocket healthcare costs during retirement, according to research by the Employee Benefit Research Institute, and it’s widely accepted that those costs could rise significantly in the future,” notes Schwab-Pomerantz. “The bottom line for everyone is that health care costs need to be carefully factored into retirement plans.”
The survey polled 1,811 investors between the ages of 25 and 80 with a minimum of $250,000 in investable assets and retirement funds, and was conducted using an online panel of general investors.