Investors' Thoughts on Retirement Income Has Changed

February 27, 2006 ( - More than one-fourth (28%) of investors say they will not have enough money when they retire to last their lifetime, according to the UBS/Gallup Index of Investor Confidence for February.

In a press release on the survey, UBS said 51% of investors surveyed said they expect to have just enough money in retirement to last their lifetime, while 20% feel they will have more than enough money.

Those who say they will not have enough money in retirement say they are “very likely” to:

  • tighten their belts and spend less during retirement than they had hoped – 65%
  • work longer before they actually retire – 63%
  • do more part-time work once they do retire – 51%
  • increase the amount of money they save – 31%
  • pursue a more aggressive investment strategy to make up the deficit – 29%
  • do nothing differently – 18%

According to the release, investors have changed their minds about where their retirement income will come from. In 1998, 61% of investors said personal savings and additional investments such as an individual retirement account (IRA) will be a major source of post-retirement income. Only 41% of respondents in the current survey said the same.

In the late 1990s, 40% of investors expected pensions to be a major source of retirement income, compared with just 29% today. However, 55% expect their 401(k) to be a major source of income, nearly the same as in 1997 (54%).

Other sources of income in retirement now cited by investors include social security (21%), money from a business or hobby (19%), part-time work (18%), and an inheritance (9%). Twenty-three percent of investors expect to work past age 65.

Aside from its special focus on retirement in February, the UBS/Gallup Index of Investor Optimism was down 13 points from January to 80. However, investors’ expectations for return on their portfolio have improved with expectations averaging 11.6%, up from 9.4% last month. Sixty-two percent of investors said now is a good time to invest.

The index was taken from a sampling included 802 investors, defined as any person who is head of a household or a spouse in any household with total savings and investments of $10,000 or more, randomly selected from across the country.