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.
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.