According to a news release, the survey found that 10% of Americans understand how much of their retirement savings they can burn off without outliving their assets. Nearly half of the Americans between the ages of 41 and 92 overestimated the rate at which they can draw from their retirement accounts, which, according to the release, is estimated at 4% per year.
For example, more than one-quarter (29%) of all respondents say they can spend 10% or more – a rate at which experts say they would run out of funds in about 11 years or less.
“Traditional pension benefits are rapidly disappearing,” said Chris Blunt, executive vice president, New York Life Investment Management, in the release. “At the same time, most Americans don’t know the right way to use their accumulated retirement savings to create the kind of reliable income stream that the pension always embodied,” he adds.
Sixty-nine percent of the consumers surveyed are concerned about major cutbacks in Social Security and half are concerned about having to fund their retirement past age 85.
More than half of the pre-retirees surveyed (58%) thought it important at or near retirement to supplement the income they will receive from Social Security or pensions by purchasing a product like an annuity that provides guaranteed retirement income. According to New York Life – which offers annuities – income annuities are emerging as a device to maximize clients’ retirement income, which more advisors (42%) said they often use income generating annuities for retirement income.
There was also some unease among survey participants about managing their retirement savings, with 70% of retirees saying that it is as hard as – or harder than – saving for retirement.
Seventy-three percent of the pre-retirees said that finding strategies for generating income in retirement was ranked as the area in retirement planning they cared most about, followed by long-term care or major health expenses (70%).
A Woman’s Issue
Women were more concerned than men about their financial security after retirement, with 57% of women saying they were concerned about retirement funding after age 85, compared to 43% of men.
Other findings of the survey include:
- 76% of the women were concerned about major cutbacks in Social Security, compared to 62% of men.
- 78% of pre-retired women (and 67% of pre-retired men) say the number one issue they should know more about in planning for retirement is generating retirement income.
According to the release, that women seem to be more attuned to funding their retirement could be linked to the fact women today will live into their nineties, and within the next three decades the number of women over age 65 is predicted to triple.
A Change in Expectation
The survey results show that about 11% of pre-retirees believe they will improve their standard of living upon retirement. Of the current retirees surveyed, 27% say their lifestyle is better after retirement.
Only 39% of pre-retirees surveyed expect to retire before age 65. That compares with the 71% of retirees surveyed who said they retired before age 65.
“Americans are grappling with the financial reality of a new retirement paradigm,” said Blunt in the release. “In terms of retirement planning, you have three courses of action. One is to lower expectations. Another is to delay retirement. The third and preferred alternative is to optimize the income generated from your accumulated savings. Many retirees will have to apply a combination of all three of these alternatives.”