NU Online News Service, May 11, 2004, 12:59 p.m. EDT – Many U.S. workers have what appear to be completely unrealistic expectations about retirement.[@@]
Merrill Lynch & Company Inc., New York, cast a harsh light on workers’ retirement beliefs earlier this year, when it hired outside researchers to survey 1,100 U.S. residents between the ages of 25 and 69.
About half of the survey participants told researchers that they believe they are saving enough to live on in retirement, but Merrill researchers note that the average age of survey participants was 46 and that the participants had saved an average of only $51,000.
The participants also reported wildly optimistic beliefs about what will happen to their retirement assets after they retire.
Most financial planning experts say that an average annual return of 12% is a great return, and most recommend that retirees limit themselves to withdrawing less than 6% of their retirement assets each year.
But “the survey respondents expect to withdraw 21% of their retirement savings each year,” says Cynthia Hayes, an executive in Merrill Lynch’s employer plan solutions unit.
Hayes adds that survey participants expect to earn an average annual rate of return of 22% on their assets once they retire.
Researchers also found that 58% of survey participants believe that 401(k) accounts are guaranteed by law.
More than half of the participants expect to supplement their income by working part time or full time after age 65, but Hayes points out that employers might have to be creative to find suitable jobs for the growing number of workers who want to work past age 65.