Posted by Wealth Wire – Friday, November 16th, 2012
We are supposed to look forward to our golden years, right? Do a little traveling, play with the grandkids, host dominoes nights. Yet, increasingly, that isn’t what some Americans are experiencing. What’s going on?
In American society, our expectations have risen over the decades, and we expect to command enough money to live as well as during our working years. But as pensions go away and interest rates drop, reality is changing. So what has happened to our retirement plans — or lack of them?
A new study brings to light 15 frightening facts about how swiftly the U.S. retirement scenario is changing. Dwindling saving patterns seem to be sweeping away the image of the relaxing “golden years” and replacing them with a harsh reality.
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In earlier years, no one envisioned working past 65. Now it’s becoming quite common. And when prospects and savings don’t work out, what remains are high hopes of finding work in later years, even if the hopes are unrealistic.
The new information begs the question, what lifestyle will America’s elderly have in 20 or 30 years?
Quite simply, this list of facts indicates that workers are saving less, planning to work later in life and have concerns and misunderstandings about how much money they’ll need to save before retiring, according to a 2012 survey by the Employee Benefit Research Institute (EBRI). The results of the survey mimic what some insiders are noticing.
“I see a lot of people coming to the conclusion that retirement is not going to be an option,” said Long Island-based attorney Leslie Tayne, who helps individuals with debt-related issues. “And that those who have gone into retirement are now finding it difficult to stay in retirement because theirinvestments have decreased in value and the cost of living has gone up.”
The survey was conducted in January 2012 through 20-minute, random-dialed telephone interviews with 1,262 individuals (mostly workers, with 25% retirees).
The results of the EBRI study show:
1. The percentage of workers who expect to retire after age 65 has increased to 37%. In 1991, only 11% expected to retire after 65.
2. One third of the working population interviewed expected to retire far past 65 — at age 70 or older — or never plan to retire.
3. Most workers, or 70%, expected to work in retirement. But planning to work into your golden years may not be in the cards for everyone. In reality, only 27% of the retirees surveyed said they actually worked. Why? Keep reading.
4. Despite their best intentions, half of retirees interviewed who retired early did so not by choice but for negative reasons, such as health trouble or layoffs.
5. The survey also shows a large percentage of workers would not be prepared for a major financial upset because 30% have less than $1,000 in savings and investments.
6. Many workers report they have virtually no savings and investments.
7. Some 60% of workers report that the total value of their household’s savings and investments, excluding the value of their primary home and any defined benefit plans, is less than $25,000.
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8. Although financial planners generally recommend setting aside money for retirement starting in your 20s, only a third of retirees said they planned for retirement at least 20 years before they quit working.
9. Fewer than half of workers say they or their spouses have tried to calculate how much money they will need saved for a comfortable retirement. (Single workers are less likely to have tried to do a calculation.)
10. Most workers, or 67%, feel they are a little or a lot behind schedule on saving for retirement. The feeling of being a lot behind schedule is inversely tied to household income, assets, health and education.
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