Retirement Reality Check

Allianz Life Insurance Company recently released their findings of a new online survey they conducted of over 1,000 people, 25 years or older, and meet certain income and investable asset requirements.  The purpose of the study was to compare the differences between people’s perception of what they think their retirement will be and what it actually is.

Here are the main findings of their 2020 Retirement Risk Readiness study:

• Half of Americans retired earlier than expected, with the vast majority doing so for reasons outside of their control, yet many non-retirees still believe they will retire on their own terms.

Within our own office, we have had clients that were thrown into early retirement due to COVID-19.  We have seen cases where people who were long-time contracted employees were told their contracts were ending due to COVID-19 cost-cutting efforts.  We have also seen other cases where someone had to retire early due to poor health in their early 60’s.  This matches up to what the study found in that 34% had an unanticipated job loss and 25% had healthcare issues.

• 65% of non-retirees believe they will work at least part-time in retirement when in reality, only 7% are doing so.

This one doesn’t surprise me at all.  The study found that the closer people are to retirement, the less enthusiastic they are to prolonging their employment.  There are some folks out there that plan to hit a milestone mark, like a 30-year work anniversary, and call it quits well before the typical retirement age.  The plan also involves working another job to pay for interim health insurance before turning 65 (Medicare age), but instead, find themselves digging into their retirement accounts because the idea of working once they retired early just doesn’t materialize.  This can cause big problems further down the road.

• 6 in 10 non-retirees said running out of money before they die is one of their biggest worries.

On top of this, half (55%) of non-retirees said they are concerned they will not have enough savings for retirement and that will impact their retirement income and their ability to do the things they want during their retirement.  Then it gets worse, only 30% of non-retirees said they have a source of guaranteed income, while only 3% have it as a high priority to look at options for guaranteed income for retirement.

This survey serves as a reminder that retirement doesn’t always go how you might think it will go, and you need to have a detailed written retirement income plan showing you the sources of your income, how much income to anticipate from those sources, and how to address certain income risks like future inflation or the death of a spouse. By preparing for the unexpected in retirement today, you will be able to live a much happier retirement in the future.

Here is the link to the 2020 Retirement Risk Readiness study:

https://www.allianzlife.com/about/newsroom/2020-press-releases/retirement-risk-readiness-study-2020

This blog is created and authored by Chuck Henrich (Content Creator) and is published and provided for informational and entertainment purposes only. The information in the Blog constitutes the Content Creators own opinions and it should not be regarded as a description of services provided by Southwest Michigan Financial, LLC. The opinions expressed in the Blog are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or on any specific security or investment product.  It is only intended to provide education about the financial industry.  The views reflected in the commentary are subject to change at any time without notice.

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