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Retirement Planning > Retirement Investing

What Pre-Retirees Worry About as Retirement Approaches

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Pre-retirees are nearly as anxious about what the future holds as they are about the present, according to research released Monday by Charles Schwab.

Sixty-five percent of study participants within five years of retirement reported feeling overwhelmed by saving enough now for retirement, and 52% said they were overwhelmed by how they would ultimately manage their different income sources once they were retired.

The research suggested a good reason for pre-retirees’ angst: Many were unfamiliar with or worried about important basics regarding retirement income.

Seventy percent of respondents said they knew little or nothing about annual required minimum distributions, and a similar percentage were uninformed about tax implications of retirement account withdrawals.

Nearly half worried about paying too much for advice on managing retirement income.

“So much of the emphasis around retirement planning is on helping people save, but helping them transition into spending down from their portfolios in retirement is just as important,” Tobin McDaniel, senior vice president of digital advice and innovation at Charles Schwab, said in a statement.

Logica Research conducted an online survey from June 27 to July 16 among 1,000 Americans aged 55 and older with $100,000 or more in investable assets. Respondents said they were retired or within five years of retirement.

Overwhelming and Complex

Managing retirement income was more overwhelming for most pre-retirees in the survey than many other financial moments typically considered stressful, such as losing a job, buying a home and paying for college.

The survey found that pre-retirees felt particularly anxious about how they would manage their income and spending needs in retirement once they stopped receiving a regular salary:

  • 72% worried about running out of money
  • 64% were overwhelmed by not being able to maintain their current lifestyle or quality of life
  • 60% worried about not getting a regular paycheck
  • 57% were overwhelmed by determining how much they could spend

As to how they would manage their money once retirement began, 52% fretted over dealing with different income sources and accounts. Fifty-four percent said they found it hard to manage the tax implications of withdrawing money from multiple accounts.

How to invest perplexed half of survey respondents.

And about three in five said they found it difficult to project how long their savings would last and to manage any unexpected expenses.

Intelligent Income

Charles Schwab recently rolled out Schwab Intelligent Income, which answers questions about how much to withdraw, how to invest based on individual goals, risk tolerance and time horizon, and how to withdraw from a combination of taxable, tax-deferred and Roth enrolled accounts in a tax-smart and efficient way.

Schwab Intelligent Income uses Schwab Intelligent Portfolios, an automated investing service, to project, manage and automate multiple income streams from enrolled accounts with the goal of generating a predictable ongoing withdrawal based on an investor’s income needs.

According to Schwab, its research showed that 73% of people within five years of retirement were comfortable using technology to automatically manage their retirement income needs.

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