According to a study conducted by the Society of Actuaries, paying for long-term care and inflation were the two main concerns of individuals who were nearing retirement or those who had recently retired. The study’s purpose was to identify financial decisions and resource management habits for pre-retirees and retirees. In the survey, pre-retirees were identified as people who had not yet retired but were at least 45 years of age. They were concerned about their ability to pay for health services in the future.
Working And Delaying Retirement
Although retirees and pre-retirees voiced the same concerns, researchers said that there are differences between what people thought they would do after retirement to manage their funds and what they actually did. About 70 percent of pre-retirees reported expecting to work after retiring. More than 45 percent said that they would delay retirement. In contrast, only 30 percent of the retired respondents actually worked after retiring, and only about 10 percent attempted to postpone retiring.
As they did in the previous year’s SOA survey, pre-retirees continued to miscalculate their life expectancy. Most of the respondents in the current survey predicted living until age 85. However, more than 50 percent of respondents reported having one or more family members who lived beyond age 90. The average predicted life expectancy by respondents was about 10 years shorter than their longest-living family member’s lifespan.
To counteract the risk of outliving retirement savings, about 30 percent of respondents reported buying a guaranteed life insurance policy. This number included more than 20 percent of the retired participants. Researchers said that this still shows a major problem with most people planning on a short-term basis instead of a long-term basis.
Additional Survey Findings
The most common financial shock that retirees cited was expensive home repairs. About 25 percent required costly dental work, and another 20 percent mentioned prescription prices or out-of-pocket medical costs.
When researchers asked pre-retirees when they plan to retire, more than 15 percent said they plan to retire within the next 10 years, about 20 percent said within 10 to 15 years, and almost 40 percent were undecided.
For pre-retirees, the main form of debt is mortgages. More than 50 percent of pre-retirees are still paying a mortgage, and about the same percentage reported having considerable credit card debt. Another 40 percent of this group mentioned that they have car loans to pay and approximately 30 percent have $30,000 of debt aside from their mortgage balance. In comparison, more than 50 percent of retirees had less than $10,000 of total debt.
Adequately planning for retirement involves setting up savings vehicles and overestimating life expectancy instead of making a low estimate. Life insurance, retirement plans and investments are all important topics to research. To learn more about retirement options and how to build a solid retirement plan, discuss your concerns with an agent.