The big three? According to recent surveys, many Americans are forced into retiring earlier than they imagined. To make matters worse, they don’t have an inkling of how much they need to save to live comfortably during their retirement years.
| Are you a Tax Lawyer in USA? 👉Transform Your Brand: Click for Metamorphosis👈 |
Nor do they have a firm grasp on how many years they might need to finance after they leave the workforce — putting them at risk of outliving their money.
Let’s start with that involuntary retirement.
According to a recent Edward Jones study, 40% of its clients were forced into retirement. That’s “not entirely shocking because life is full of surprises and that doesn’t stop with retirement,” Jennifer Schoonmaker-Dasch, an Edward Jones financial adviser in Lexington, N.C., told Yahoo Finance.“I see clients being forced into retirement for a variety of reasons such as company downsizings or, most frequently, personal health issues.”
That meshes with a survey by the Employee Benefit Research Institute (EBRI) and Greenwald Research earlier this year, which found that there is a big disparity between when active workers expect to retire and when retirees say they actually did: Workers continue to report an expected median retirement age of 65, while retirees say they retired at a median age of 62.
Workers are even likely to say they expect to retire at ages 70 or older. One in three workers expect to retire at 70 or beyond or not at all, while only a slim fraction actually hang on that long.
Don’t want to think about it
The looming specter of being forced to retire sooner than expected is complicated by the fact that many people haven’t planned appropriately.
For many folks, retirement savings is a guessing game, according to a survey by the nonprofit Transamerica Center for Retirement Studies (TCRS), in collaboration with the Transamerica Institute.
Roughly 1 in 5 workers across generations estimate they will need to save $2,000,000 or more including baby boomers (24%), Gen X (22%), millennials (21%), and Generation Z (17%). But among those providing an estimate, nearly half of workers said they were just, well, guessing.
They don’t even want to entertain the idea.
Some 4 out of 10 workers agreed with the statement, “I prefer not to think about or concern myself with retirement investing until I get closer to my retirement date,” including 13% who strongly agree and 29% who somewhat agree. (Generation Z and millennials are even more likely to agree than Generation X and baby boomers.)
How long will I live?
To add to the triad of disturbing stumbling blocks: Many Americans fail to grasp how long they could potentially live. Just over a third of Americans knew the average lifespan of retirees, according to a report from the TIAA Institute and the Global Financial Literacy Excellence Center at the George Washington University School of Business. And only 12% knew the right responses to a basic quiz designed to gauge longevity literacy.
On average, a 65-year-old man will live to age 84 and a 65-year-old woman to age 87. Moreover, a 65-year old man has a 30% chance of living at least until age 90 and a 65-year-old woman has a 40% chance of hitting that mark.
