Fewer than one in four workers or retirees at or over the age of 50 are “very confident” they will be able to maintain a comfortable lifestyle throughout retirement, with most reporting their greatest fear being centered on outliving their assets.
This is according to “Life in Retirement: Pre-Retiree Expectations and Retiree Realities,” a new survey report released by the Transamerica Center for Retirement Studies (TCRS) in collaboration with the Transamerica Institute.
The survey is a portion of TCRS’ long-running Annual Retirement Survey. This portion of it compares post-career preparations and expectations of active older workers with the experiences of retirees, drilling down on “their visions of aging and retirement, when and how retirement happens, life after ending work, and their finances.”
“Retirement brings freedom and time for pursuing personal passions,” said Catherine Collinson, CEO and president of both TCRS and the Transamerica Institute. “Our research finds that retirees are happy, purposeful, and have a positive view of aging. However, many are financially vulnerable and risk running out of savings. Their cautionary tale underscores the imperative for strengthening our retirement system.”
Forty-five percent of 50+ workers and 32% of retirees reported that their greatest fear is outliving their assets, usually in the form of savings and investments.
The greatest fear reported by retirees in isolation rests on the murky future of the U.S. Social Security program, where 42% of workers at or over age 50 fear “Social Security will be reduced or cease to exist in the future,” the report found. Thirty-nine percent of retirees also report such a fear.
Social Security is often cited by both cohorts as their expected primary source of income in retirement, according to the results.
“As a sign of the evolving retirement landscape, almost one in five retirees (19%) expect to primarily rely on income from a company-funded pension plan, compared with just 10% of age 50+ workers,” according to the survey. “In contrast, 26% of age 50+ workers expect to rely on 401Ks, 403Bs, and IRAs, compared with 11% of retirees. A noteworthy 11% of age 50+ workers expect to rely on income from continued work.”
In terms of home equity and its potential role in providing cash flow in later life, only 1% of respondents said they expect to primarily rely on home equity or an inheritance.
Common mistakes to avoid in retirement are also addressed in the survey results, including being overly optimistic about retirement expectations, overlooking life expectancy as a factor in retirement planning and claiming Social Security benefits too early.
Other missteps include failing to take adequate steps to safeguard health, failing to plan for long-term care and not seeking out the assistance of a financial advisor, ideally a fiduciary.
