If information is power, many Americans nearing retirement age may be in trouble. A significant portion of the population doesn’t know much about retirement planning and doesn’t have the information they need to make good decisions, according to a MoneyRates.com survey.
More than two-thirds of respondents don’t know how much they should save or how much they could afford to spend in retirement.
Of those yet to start collecting Social Security, most intend to wait to reap the larger benefit; but of those already collecting Social Security, the majority did so at age 62.
Less than 10 percent of respondents who don’t feel knowledgeable about retirement planning have consulted a financial professional.
Among the key findings:
- No budget. Fifty-five percent do not have a budget for how much they will be able to spend per month in retirement. Even when responses were broken down to only people who already are retired, nearly half said they don’t have a spending budget.
- Outliving savings. Three-fourths of respondents don’t expect their savings to last more than 20 years at current spending rates. The average life expectancy when a person reaches age 65 is 19 years, according to the Centers for Disease Control and Prevention. At age 75, the average life expectancy is 12 years. Because roughly half the people will live beyond the average life expectancy, it’s important to save enough to last beyond that average.
- Adjusting standard of living. Four in 10 plan to lower their standard of living if savings fall short. Others said they will live with a roommate, move to a different city or country, rent their house and move in with family, sell their home and rent, or go back to work.
- Waiting on Social Security. Only one in five plans to start receiving Social Security benefits as early as possible. Forty-six percent intend to wait until age 66 or older, while 34 percent plan to start between the ages of 63 and 65.
- No planning knowledge. Nearly half of respondents said they don’t know much about retirement planning. Of this group, less than 9 percent had worked with a professional financial advisor, compared with 29. percent of respondents overall.
- No clue. Less than half have run projections to see how their savings will hold up through retirement or have had an advisor do it for them. Because only a minority of respondents had taken this step, it’s fair to say most do not have the information they need to plan for retirement.
- No knowledge of plan investments. More than a quarter of respondents said they don’t know how much of their retirement investments is in stocks.
The survey is a call to action for many Americans, according to the writer of the survey report.
“To use the survey’s findings as more than just a wake-up call, consumers might start by realizing they can engineer their finances instead of letting their financial prospects just happen,” the report said. “At the very least, becoming aware of the need can spark a journey to explore various topics and educate oneself.”