Due to our ever-increasing lifespans, many Americans will live decades after retiring. With pensions growing rarer, and people not saving enough for retirement, many worry that they will run out of savings before their time on Earth is up. While many of today's retirees feel that their money will last, tomorrow's retirees are nowhere near as confident.
"Retirees would rather die than run out of money," says Certified Financial Planner Brett Anderson, President of St. Croix Advisors in Hudson, Wisconsin. "Running out of money is a real fear for most people with whom I meet."
In an exclusive MoneyTips online survey, 452 Americans were asked whether they agreed or disagreed with the following statement:
Less than half (42.7%) of the people surveyed overall agreed with the statement, while more than one-quarter (25.8%) disagreed. Only about 1 in 8 (12.8%) strongly agreed.
Says Anderson, "I find it interesting that less than half the people surveyed agreed that their money would last as long as their lives. That's not good; period." As pessimistic as that is, the situation is more dire for the people who haven't yet retired.
While slightly more than half of the retirees (50.4%) believed that their money would last, less than one-third (32.5%) of those yet to retire did. The non-retirees were evenly split between thinking that their money would (32.5%) and wouldn't (32.5%) last. However, more of them strongly disagreed with the statement (11.9%) than strongly agreed (6.7%).
When we break down the respondents by gender, men (49.3%) were more likely to believe that their money would last than women (37.1%), who tend to have longer lifespans. Nearly 1 in 5 (19.3%) men agreed strongly with the statement, but only 1 in 14 (7.3%) women did.
Finally, we looked at how family income affected retirement financial security.
Not surprisingly, the more money one earned, the more likely they were to agree that their money would outlast them. While less than a quarter (23.3%) of people in families earning less than $30,000 annually agreed that their money would last through retirement, a clear majority (60.3%) of people in families earning more than $150,000 annually agreed.
Anderson, who is also a Chartered Financial Consultant (ChFC) and Chartered Life Underwriter (CLU), explains, "I've learned over the years; it's not about what you make, but rather how much you keep. No matter your income level, you should be financially prepared."
Says Dr. Michael Zey, Professor of Management at Montclair State University's Feliciano School of Business in New Jersey, "As the survey indicates, a significant proportion of Americans believe they will not have enough money to retire comfortably. These findings are supported by a number of studies demonstrating that Social Security, 401(k)s and private and public pension programs will simply not generate the income necessary for millions of Americans to enjoy an adequate standard of living over the two decades-plus they will most likely live after retiring at 65. People are already responding to this growing problem by working past 65 and even into their seventies."
Adds Anderson, "We are living longer, and we all know it. Therefore, we will either need to save more today or work longer. It's simple math.
"We need to understand our financial well-being today, and I suspect for most, take meaningful steps to place ourselves in a better financial position to have the financial future and retirement we desire."
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