Although they might be confident in their savings for retirement, when it comes crunch time, many affluent retirees and pre-retirees find themselves ill equipped because they do not have an adequate retirement plan in place, according to a recent survey conducted by Boston-based MFS Investment Management.
The Retirement Research Study, was the first of its kind conducted by MFS. Results were drawn from 442 surveys completed online by 202 pre-retirees and 222 retirees between the ages of 55 and 75, who use a paid professional financial advisor and report at least $100,000 in investable assets excluding retirement accounts and real estate.
MFS also surveyed 216 advisors serving the high-net-worth investor base. While those advisors would recommend putting together a retirement income plan at least 10 years before retirement, 52% of the survey’s pre-retirees reported that they do not have an income plan, and over a third of those do not expect to even discuss an income plan with their advisor for another six or more years, if ever. One in three retirees have no retirement plans in place.
According to the survey, the escalating cost of healthcare and the rise in inflation are the biggest concern for retirees and pre-retirees. Seventy-nine percent of pre-retirees and 87% of retirees fear that these factors may cause them to outlive their savings. In addition, 57% of pre-retirees feel that they are too conservatively invested to counter the problems associated with healthcare costs and inflation.
Inflationary pressure is one of the biggest concerns for retirees and pre-retirees today, says Jim Jessee, President of Boston-based MFS Fund Distributors, and many report they’re unprepared to deal with a rising cost of living.