Are You Able to Afford Retirement – 50% of You Don’t Think You Are
Nearly half of Americans fear not being able to afford retirement
Lot’s of Things Have Changed Since Mom and Dad Ran the Business
- We’re Living Longer
- This means your Assets have to last longer
- Company Pensions rarely exist
(defined Benefit Plans like Unions and Government employees receive)
- 401ks are now the norm (personal contribution model)
- 2008 Recession/Depression stripped retirement assets to meet immediate financial obligations 1
“Saving for retirement is a marathon, not a sprint. By establishing a monthly budget and starting to build up savings early, Americans will find themselves in a much better position later on”
Back to Zero (or close to it)
Retirement assets are meant to grow over time, but many of us are uncertain about being prepared for retirement—and wondering what can they do about it. 2
According to results from a new American Institute of CPA (AICPA) survey, nearly half of non-retired adults (49%) in the U.S. say they’re not certain they’ll be financially prepared to retire when the time comes.
In addition to being unclear about their financial preparedness, respondents (42%) said their lack of confidence in their ability to retire was causing them anxiety. Twenty-nine (29%) percent described themselves as somewhat anxious, while 14% said they were very anxious.
Of those respondents who were anxious about their retirement finances, many said they were worried about economic factors they could not control, including health care costs (cited by 71%), health care uncertainty (68%), uncertainty about Social Security (62%), and uncertainty about tax rates (52%). The difficulty of retirement planning, in general, was a cause of anxiety for 54% of respondents, while 70% said they were anxious about determining how much money they would need.
The Changing Face of Retirement
The “three-legged stool” of retirement income (Social Security, a pension, and personal savings) has changed in recent years. Top sources of retirement income? Retirees reported Social Security (61%), pension plans (36%), and savings accounts (25%). 3
Survey respondents who are not retired indicated they would rely less on Social Security (48%) and pensions (17%) as their top two sources of income in retirement. Their anticipated reliance on personal savings (39%) was notably higher than that of respondents who were already retired.
This reflects the move by a substantial number of employers away from offering traditional defined-benefit pension plans to their employees. Many employers have replaced their pension offerings with defined-contribution arrangements, such as 401(k) plans. These moves have generally resulted in cost savings for employers, but employees many times do not save enough to replace the retirement income they might have received under a typical defined-benefit pension.
“The most important thing people can do in any financial environment is to focus on what they can control and understand the role that their actions play in their retirement plan.”
Planning also help ease anxiety about retirement, including compiling a list of assets, liabilities, and spending. We have some suggestions below: 4
Morris+D’Angelo Solutions: Where We’d Start
- Budgeting: We’ll help create your budget; a budget you can live within
- Liquidation: We’ll examine which assets we can liquidate
- Options: Explore options to grow your pension(s) quickly
- Lifestyle: Match your lifestyle to your future plans (save more, spend less)
- Borrowing: Minimize borrowing (credit cards) and loans
Ultimately retirement is not just about affording your non-working years, however, being unable to make the choice is a terrible thing. We are here to help. Please Contact Us at Morris+D’Angleo.
CONTACT US… Morris+D’Angelo is the industry-leader for many High-Wealth Customers and Organizations.
707 SW Washington St., Suite 1100
Portland, Oregon, 97205
503.749.6300 – Portland Office
408.292.2892 – San Jose Office
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