Only one in four of the 33 million U.S. pre-retirees (non-retired, aged 55-70) say they feel “very prepared” for retirement, compared to 30percent of pre-retirees surveyed in 2010, according to a new study by LIMRA.
On average, surveyed pre-retirees believe they will need less than two-thirds of their current income during retirement. This is less than the 70-80 percent level commonly recommended, LIMRA reports.
In addition, pre-retirees say they will need to withdraw nine percent of their assets annually to pay basic living and discretionary expenses. Based on historical investment returns, this withdrawal rate will result in some pre-retirees running out of money in retirement, which is likely to last 20 or more years, the survey adds.
The study also finds that two-thirds of pre-retirees expect to work in retirement. Prior LIMRA research indicates that this is improbable as less than a third of current retirees report having jobs. In addition, almost half of current retirees retired before they planned — half involuntarily — often due to layoffs or personal or family illness.
Consistent with prior LIMRA research, the survey adds that men are more likely to consider themselves very prepared for retirement (30 percent vs. 23 percent). Pre-retirees with household incomes of $100,000 or more are also more likely to feel very prepared than pre-retirees in general (40 percent vs. 27 percent).
However, among wealthier pre-retirees (those with at least $500,000 in household financial assets), just over half say they are very prepared.
LIMRA’s survey reveals that pre-retirees who work with financial advisors are twice as likely to rate themselves as very prepared as those who do not (39 percent vs. 20 percent). Prior LIMRA research found that individuals who work with an advisor are more likely to be saving for retirement and at a higher rate.