Retirement Savings Worries for Many Lag Current Money Concerns

May 24, 2005 ( - The financial demands of everyday living are taking over many Americans' desire to save for a comfortable retirement, according to a new Prudential Financial study.

A Prudential news release said seven in 10 Americans are most concerned with their money needs in the short and mid-term and place retirement savings a distant third priority. In fact, 60% of Americans indicated they are behind schedule in saving for retirement and the vast majority now expects to work longer and/or to continue working in some way in retirement, the survey found.

Women face an even greater challenge as they have to catch up more than men and, given longer lifespans, likely will need their financial resources for a much longer period in retirement, Prudential said.

Four in 10 respondents indicated they were forced to retire, and nearly half of involuntary retirees were under the age of 60. Almost two-thirds of the people who unexpectedly retired indicated they were not financially prepared, the survey found.

Quality of LIfe Impact

This sense of financial unpreparedness can diminish a retiree’s perceived quality of life, including their emotional well-being, overall health, activity level, and family responsibilities, Prudential found.

Among those who were forced out of the workforce, six in 10 said they are now simply trying to make ends meet. Even among those who retired on their own terms, two-thirds indicated they are just living “comfortably.” Fewer than half of all retirees said they were able to travel or vacation as they may have hoped. Only about 5% would say they live an “upscale” lifestyle of freedom and flexibility.

During the first ten years after retirement, seven in 10 Americans currently expect to continue working to supplement income and continue to build their nest egg. At the same time, 64% recognize that may come while their health is getting worse, the survey found. In the second 10 years of retirement, 80% of respondents indicated health care was a top concern, with many retirees expecting to require nursing home care and/or run out of money entirely.

The survey also found that:

  • Although 401(k) plans were cited by respondents as one of the top three positive factors impacting retirement prospects, more than 30% of those recently retired were not enrolled in employment-based plans. When looking at involuntary retirees, that number swelled to more than 50%.
  • During the last five years, 59% of those surveyed (ages 30 to 69) feel both the general economic environment and their personal situations have harmed their retirement prospects.
  • All survey respondents, regardless of age, income and ethnic or racial backgrounds, consistently expressed a lack of progress in retirement security since the turn of the century. Only 16% of respondents feel they made some progress during this same period in their retirement savings efforts.
  • More than half of all respondents expect to move to areas with a lower cost of living or into a smaller home within 10 years of retirement.
  • 83% percent of involuntary retirees think the equity in their home is a dependable source of retirement income. Yet, more than half still have an outstanding mortgage on their primary home.

Clueless About Financial Products?

Not only are many Americans in a precarious financial state when it comes to retirement savings, almost half of Americans surveyed indicated they are perplexed about how to choose financial products to help meet those retirement goals.A significant percentage of each ethnic segment surveyed was unfamiliar or uncomfortable with choosing retirement products and services, the survey found In 2004, fewer than two in 10 met with a financial professional for retirement advice.

Prudential’s Roadblocks to Retirement report is based on an online national random sample of 621 Americans between the ages of 30 and 69 who were asked about their financial priorities, retirement preparation and their retirement concerns and challenges. The survey was administered between December 18, 2004 and January 3, 2005.

The report is available here .