Workers on the cusp of retirement are more anxious than recent retirees despite both groups having significant assets in 401(k)s, says a new survey from T. Rowe Price.
Meanwhile, the survey — which focused on new retirees who have 401(k) account balances or rollover IRAs and workers age 50 and older who are 401(k) participants — found that many recent retirees have accumulated significant nest eggs and are faring well, both financially and emotionally.
According to the survey, a greater percentage of workers believe that they will have to reduce their standard of living compared with the retirees (49% vs. 35%). More workers also believe that they will run out of money (22% vs. 14% of retirees), and they are less likely to believe that they will have enough money to pay for health care (49% vs. 70% of retirees).
“For workers approaching retirement, we know there is anxiety and uncertainty as they look ahead and think they can’t possibly be prepared for retirement. But this study demonstrates that you can do it,” said Aimee DeCamillo, head of T. Rowe Price Retirement Plan Services, Inc., in a press release. “Many people are successfully saving in the private retirement system, and they report that post transition, they are fine.”
In fact, 89% of the recent retirees surveyed said they feel somewhat or very satisfied with retirement so far and 74% of recent retirees said “they are somewhat or much better off financially compared with how their parents lived when they were their age.”
“We have an opportunity to share these positive stories with 401(k) savers,” DeCamillo said in a press release. “We also need to emphasize the important role Social Security plays as the foundation of retirement income for most American households and the strategic advantages of delaying Social Security benefits.”
Among retirees, the study found that Social Security accounted for the largest portion of a income, with 43% coming from Social Security, 19% from traditional defined benefit plans, and 18% from personal savings and investment accounts, including IRAs and defined contribution plans.
Of the yet-to-be-retired crowd, the majority of the workers have decided Social Security can be delayed. According to the survey, 80% indicated their intent to wait until at least their full retirement age (66) to begin collecting Social Security benefits and 34% said they would be willing to take the maximum benefit at age 70. Only 20% of the workers surveyed said they would collect Social Security benefits as soon as they become eligible (age 62).