Not surprisingly, a weak economic environment, high unemployment and an uncertain future means more Americans are relying on Social Security for a higher portion of their income in retirement, according to a new study from The Hartford Financial Services Group. However, despite the growing dependence on Social Security, most Americans say they are aware that it will not be enough to fund their retirement.
The Hartford's 2010 Investments & Retirement Study found that 38.8% of survey respondents cited Social Security as their most important source of retirement income, up from 26.7% in 2006, when the study was first conducted. Yet Americans overwhelmingly point to themselves (75.2%) rather than the government (5.3%) as being most responsible for providing their income in retirement. And 85.4% say Social Security alone won't be enough to maintain their standard of living in retirement, up from 81.1% five years ago.
"The lack of confidence about the adequacy of Social Security, combined with a growing pessimism about the future, is contributing to greater uncertainty on the part of many Americans about when or if they may ultimately retire," says Dr. Joseph Coughlin, founding director of the Massachusetts Institute of Technology's AgeLab, which researches the effects of aging.
Coughlin pointed out that 37.2% of Americans now say they are unsure when they will be able to retire and 27.1% say they hope to work as long as their health or the health of their significant other allows.
The Hartford's study showed that nearly one in five people (18%) plan to work as long as possible in their current job. Working longer is one way to help generate a predictable income, says John Diehl, senior vice president of The Hartford's Wealth Management division. But no one can be sure about how long he will remain healthy enough to continue working later in life or what the economic climate might be like in retirement.