Less than 40% of workers said they have recovered financially from the recession that started in December 2007, according to a report from Transamerica Center for Retirement Studies. Thirteen percent said their recovery hasn’t started yet, while 7% said they may never recover.
That lukewarm recovery can be seen in respondents’ retirement outlooks. The survey found 41% of workers have somewhat recovered from the financial crisis; a similar percentage – 47% – are somewhat prepared for retirement. Twenty percent of respondents said they have fully recovered from the crisis; 15% are very confident they’ll live comfortably in retirement.
TCRS released in mid-December the results of its 17th annual retirement study, asking workers about their retirement outlook. It surveyed more than 4,000 adult workers, 6% of whom were still working past age 65.
“American workers are still struggling to regain their financial footing from the Great Recession and its after-effects,” Catherine Collinson, president of TCRS, said in a statement. “Most are concerned about the future of Social Security and few are very confident about their retirement prospects.”
Respondents reported a median life expectancy of 86, but almost 40% said they expect to live at least to age 90. With such long retirements to plan for, they’re not at all confident they’ll be able to live well once they stop working. Eighty-two percent said their generation will have a “much harder time” securing their financial future than their parents did.
Respondents are splitting their focus between saving for retirement and just getting by. When asked about their financial priorities, 57% cited retirement savings as a priority, followed by 47% who are also struggling in their day-to-day.
And while 26% of respondents said saving for retirement was their single greatest priority, 21% said just covering their living expenses was most important.
TCRS found respondents had little confidence in Social Security. More than three-quarters are worried it won’t be available by the time they’re ready to retire, even though 70% include it as a source of income in retirement. Most workers will rely on savings to fund their retirement, and 38% say they’re just going to keep working.
Respondents reported a limited understanding of Social Security. Almost half said they had some understanding of how the program works, and 44% said they understand quite a bit or a great deal about it.
The best thing advisors can do to help retirement investors is to put a number on how much they need to save. Most are just guessing, and although that’s down slightly from the last couple of years, when over half guessed at how much they needed for retirement, very few are using tools like calculators and savings worksheets to estimate savings needs. While 23% said they estimated their retirement needs based on their current expenses, considering the fact that almost 60% expect their standard of living to remain the same or get better in retirement, they could be in for a surprise.
Interestingly, financial advisors and brokers were cited as the most influential source of information, despite only 39% of respondents saying they have an advisor. Advisors are still competing with clients’ friends and family, though. More respondents said they turn to their personal network for financial information, even though they rated professionals’ advice as more valuable.
--- Read More Americans Resolve to Seek Financial Advice in 2017: Allianz on ThinkAdvisor.