Americans are widely confident of their own ability to prepare for retirement but aren’t so sure about how well other Americans will do, finds a new survey by National Underwriter/New York Life. And when pressed, many admit failings that suggest they could use help in preparing for their golden years.
The study finds 72% of Americans give themselves high grades (“A” or “B”) for retirement preparations.
Yet when asked whether their fellow Americans would do well in retirement, 95% thought others would not be able to afford the lifestyle they wanted. That included 29% who thought most Americans will face a financially grim retirement.
The survey also finds 70% of pre-retirees expect to live at least 20 years, while 47% expect to live at least 25 years beyond retirement.
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Yet considering how long they expect their nest egg to last, many set modest retirement savings goals or didn’t even know how much they’d need to accumulate to fund a comfortable retirement.
Among pre-retirees, 63% thought they would need $250,000 or more to have a reasonably contented life after they leave the work force, while 56% thought they’d need at least $500,000, according to the study. Another 7% thought they’d need to accumulate less than $250,000.
On the other hand, 28% didn’t know how much they needed to save.
A comparison of the responses of retirees vs. pre-retirees showed while many had traditional retirement plans, which pay a defined benefit, the number was dwindling dramatically.
Among retirees whose household had at least one retirement plan, 80% had a traditional pension plan. But among those who still are working, just 60% said either they or their spouse had a defined benefit plan.
Among those with no traditional pension, 56% who already had retired said they wish they had one. Among pre-retirees, 48% acknowledged that they wished either they or their spouse had taken a job that offered a good pension plan.
One of the more telling questions in the survey asked pre-retirees how much of their nest egg they could safely withdraw each year without risking ultimately running out of money. Only 10% said they could withdraw less than 5% safely each year, a figure with which most professional financial advisors would concur.
Another 19% thought they could safely pull out 5% to 9% annually, while 17% specified 10% to 14%. Twelve percent thought they could withdraw anywhere from 15% to 25% or even more annually.
The remaining 40% said they didn’t know.
The survey also finds a number of differences, at times dramatic, between men and women.
For instance, 45% of men said they would prefer a retirement plan in which they were completely responsible for all investment decisions vs. only 25% of women who felt the same.
Women were found to be far less likely to know how much they could safely withdraw from their nest egg, with 51% saying they did not know vs. only 29% of men.