More than twice as many retirees as last year report being worried about their financial situation and many are cutting spending or hiring financial professionals as a result.
A survey of retirees aged 56 to 77 holding more than $100,000 in assets showed 49 percent feel less secure than when they entered retirement, an increase of 29 percent over last year. Inflation also registered as a worry for these retirees.
LIMRA, the Society of Actuaries and the International Foundation for Retirement Education released the study, entitled “What a Difference a Year Makes.”
The 43 percent of retirees who indicated their investment risk tolerance had declined in the past year cited the following reasons: concern about the economy, concern about future inflation, not enough time to recover from the economic downturn and change in home value.
According to Sally Bryck, who headed up the survey, “Retirees are definitely feeling the effects of the 2008 financial crisis and have begun changing their behavior. Today 61 percent say they have a personal financial advisor, compared to 56 percent in 2008. Seeking professional help shows how severely things have changed and how unsure retirees are about doing things themselves.”
The number of retirees who feel “very confident” they have saved enough for retirement plunged in the past year. Only one quarter are very confident they have saved enough to last through retirement, a 12 percent drop since 2008.
An asset class that might guard against such perils to a secure retirement as inflation and outliving one’s savings, however, was not well represented in the survey.
Noted SOA member Anna Rappaport, “Even among retirees for whom Social Security does not cover their basic expenses, a guaranteed lifetime income, such as that provided by an annuity, is not a core focus of the retirement plans of the retirees surveyed. Among retirees whose core expenses are not covered by Social Security, 31 percent indicated interest in converting a part of their savings into guaranteed lifetime income.”