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May 13, 2007 at 04:00 PM
Financial services clients over age 55 seem to have a different perspective than younger clients on what post-retirement health care really will cost.
Researchers at the Employee Benefit Research Institute, Washington, and Mathew Greenwald & Associates Inc., Washington, have included figures supporting that conclusion in an age comparisons fact sheet published in conjunction with the 2007 Retirement Confidence Survey report.
Pollsters interviewed 1,001 U.S. workers ages 25 and older for the survey.
The EBRI and Mathew Greenwald researchers then compared the 2007 results with results from a similar survey conducted in 1997.
The researchers detected many different kinds of apparent overconfidence in retirement readiness.
The researchers found, for example, that 62% of current workers expect to receive a defined benefit pension when they retire, even though only about 41% said they or their spouses are enrolled in defined benefit pension plans.
“One-third of those people think they’re going to get a pension benefit that doesn’t exist,” says Dan Houston, an executive vice president in the retirement and investor services operation at Principal Financial Group Inc., Des Moines, Iowa.
Analysts at Fidelity Investments, Boston, have estimated that workers will need more than $200,000 to cover post-retirement health care costs–without even including long term care costs–but only 24% of the EBRI/Mathew Greenwald survey participants said they expect to need more than $250,000 in savings to cover post-retirement health care costs, and 12% said they expect to need less than $100,000.
“Those who have obtained investment advice from a professional financial advisor are less likely than those who have not to report they will need less than $50,000 and more likely to say they will need $75,000 or more,” researchers write in a summary of the survey results.
The total percentage of EBRI/Mathew Greenwald workers participants who are not at all confident about being able to take care of medical expenses in retirement has fallen to 14% this year, from 20% in 2005, researchers report.
