SOA: Many Still Fail To Plan For Retirement

For retirees, the findings include:

–About one-fifth planned to move to a smaller home or less expensive area.

–8% of retirees in 2009 and 9% in 2007 planned to buy long term care insurance.

–About three-quarters had no plans to purchase a financial product or choose an employer plan option to have a guaranteed annual level of income for life.

There is an overall misperception among retirees and pre-retirees that a strategy of planning for the short term would last them through the remainder of their lives, the study found.

For example, 54% of retirees and 64% of pre-retirees agreed that if someone manages their finances well during the first 3 years of retirement, their money will last for the rest of their retirement.

“More long-term planning is needed for individuals, and it is imperative that they look beyond 5 or 10 years, because that is the tip of the iceberg for many individuals nearing retirement or early into their retirement,” said Anna Rappaport, chair of the SOA Retirement Risk Survey and owner of Anna Rappaport Consulting. “Individuals are clearly concerned about their retirement and the associated risks, but many are still not taking the necessary actions and planning to address these issues.”

SOA’s 2009 survey found 81% of retirees and 90% of pre-retirees indicated they eliminated or plan to eliminate all of their consumer debt, compared to 79% of retirees and 89% of pre-retirees in 2007.

“We’ve found that retirees and pre-retirees continue to try to protect themselves against financial risks by decreasing debt, increasing savings and cutting back on spending,” said Rappaport. “These steps are simple, but they are only a starting point. More follow-through is needed on the larger actions, such as considering purchasing a product that guarantees lifetime income or planning for widowhood and severe healthcare challenges.”