The apparent disconnect is also emphasized when respondents are asked if they feel afraid that they aren’t saving enough – only one in three (32%) agree. While it’s encouraging that most Americans feel unafraid and in control of their finances, the number of those who say they feel unsure about whether they can afford what they need and want in retirement is troubling.Exposing the Gap: What Americans Think They Need vs. What They’ve Actually SavedAdding to the contradictions between emotional assurance and actual financial preparedness is that Americans really haven’t saved as much as they think they will need – despite the fact that so many believe they could save more or take extra steps to prepare. The data uncovers that these Americans between the ages of 50-70 believe they need to add approximately $250,000 to their nest egg to retire comfortably. On average, respondents say they think they will need close to $1 million for a comfortable retirement ($934,000), but their current investable assets are just under $700,000, including their employer-sponsored plans. Perhaps even more concerning is that one in four respondents (22%) report they have less than $250,000 total saved for retirement. But Americans are thinking about how they might make up the difference. Nearly half (47%) expect to use their home equity to help fund their retirement – a surprising statistic considering that housing values remain well below pre-recession levels in many parts of the country. Doing so may be even more difficult for the 37% of homeowners who say they’ve not yet or are not on track to pay off their mortgage before they retire. Though most Americans don’t include punching the clock as part of their ideal retirement, a surprising 68% of soon-to-be retirees say they plan to work at least part-time after they officially leave the workforce. Doing more meaningful work for pleasure or to help supplement retirement income may be part of many Americans’ plans, but what some also fail to consider is that an unexpected illness or disability can impair a person’s ability to work as long as they wish.
Retirement in Balance – Health vs. WealthHealth and finances are two of the biggest challenges that come with aging. When asked whether they worry more about their health or their finances in retirement, half of respondents admitted they are more concerned about their health (53%), while only one-third (35%) answered with the latter. But the 5% that answered “both” might be on to something – financial and physical health often impact one another.It also appears that a significant number of Americans may not be familiar with what their medical costs might be in retirement. More than half (56%) of respondents admit they have not researched what Medicare covers, and 69% acknowledge that they haven’t purchased long-term care insurance. Though future medical expenses can be challenging to predict or calculate, these actions can help alleviate financial stress should individuals encounter significant medical costs as they age. So what can Americans do so that their emotions, confidence and retirement expectations all align? The answer – continue taking steps to prepare. “The study reveals several action steps that those who feel the most confident about affording essential expenses in retirement have taken, including having a written financial plan, factoring inflation into their retirement plans and calculating how much income their assets will produce in retirement,” added de Baca. “These are actions anybody can take, even if they are maxing out savings or cannot afford to simply save more.” About the surveyThe Retirement Check-In ® survey was created by Ameriprise Financial utilizing survey responses from 1,000 employed Americans ages 50-70. All respondents have investable assets of at least $100,000 (including employer retirement plans, but not real estate) and are planning to retire at some point. The survey was commissioned by Ameriprise Financial, Inc. and conducted via telephone interviews by Koski research from October 31- November 14, 2012. The survey was conducted among a targeted sample of households. Cell phones were approximately 25 percent of the sample. The margin of error is +/- 3 percentage points. About Koski ResearchKoski Research is focused on having better conversations with key stakeholders – customers and clients, influencers, business peers and the general public. The firm combines high level proprietary custom research with research conducted for public release. All of this research relies on asking engaging questions, applying research acumen to create solid study designs and using marketing smarts to produce executive-ready reports that lead to action. About Ameriprise FinancialAt Ameriprise Financial, we have been helping people feel confident about their financial future for over 115 years. With outstanding asset management, advisory and insurance capabilities and a nationwide network of approximately 10,000 financial advisors, we have the strength and expertise to serve the full range of individual and institutional investors' financial needs. For more information, or to find an Ameriprise financial advisor, visit ameriprise.com. Brokerage, investment and financial advisory services are made available through Ameriprise Financial Services, Inc. Member FINRA and SIPC.
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