More preretirees than not believe they aren’t financially prepared for retirement, according to a new survey by the American Institute of CPAs (AICPA).
The phone survey of 1,018 adults conducted in March revealed that while 46 percent believe their golden years of retirement will shine brightly, 49 percent suffer from what we’ll call “preretirement financial jitters.” A fifth (20 percent) of these anxious adults don’t think they’ll ever reach their retirement financial goals, while almost a third (29 percent) aren’t sure.
“Saving for retirement is a marathon, not a sprint,” Greg Anton, CPA, CGMA, chairman of the AICPA’s National CPA Financial Literacy Commission, said in a prepared statement. “By establishing a monthly budget and starting to build up savings early on, Americans will find themselves in a much better position later on. The most important thing people can do in any financial environment is focus on what they can control and understand the role that their actions play in their retirement plan.”
Most current retirees (61 percent) cite Social Security as their key income source, followed by pension plans (36 percent) and cash reserves (25 percent).
But that’s not the case for preretirees. Concerns about Social Security and a notable drop in company pensions mean that many expect to rely more on savings.
Compared to retirees, only 48 percent of preretirees expect to rely on Social Security, while 17 percent will look to pensions. But 39 percent said they’ll depend on cash. And 43 percent of preretirees will rely on a 401(k), compared to 14 percent of current retirees, as a key source of retirement funding.
So, what’s driving the financial angst for preretirees? Here’s the list:
- Healthcare issues (71 percent cite costs, and 68 percent said healthcare uncertainty)
- Determining retirement financial needs (70 percent)
- Ability to afford daily expenses (67 percent)
- Social Security uncertainty (62 percent)
- Tax uncertainty (52 percent)
What do they plan to do about their worries? The answer: Sacrifice.
Almost half (45 percent) said they’ll work longer full-time, and 43 percent will work part-time. Forty percent opted for moving to a less-expensive place, while 28 percent said they will drop medical care or treatment.
“Working throughout your life was once a reliable route to a comfortable, financially secure retirement. Over the years, Americans have been asked to take on more responsibility and become more self-sufficient when it comes to their retirement planning,” Anton said. “We’ve found that, today, even Americans who say they’ll reach their financial goals are anticipating a more active ‘retirement-lite’ that involves working and making financial sacrifices.”
About Terry Sheridan
Terry Sheridan is an award-winning journalist who has covered real estate, mortgage finance, health care, insurance, personal finance, and accounting and taxation issues for newspapers, magazines, and websites. A Chicago native and former South Florida resident, she now lives in New England.