For more than 10 years retirement experts have been warning the middle-class to prepare more conservatively for retirement. “Don’t expect to live in retirement the same way that you did when you were still collecting a regular paycheck” was often quoted, but not very often heeded advice. A USA Today article updated this topic recently with additional insights. Now the leading cause for anxiety is what the standard of living will be like for Americans once they retire from the paid workforce. Retirement is now the number one concern for Americans regardless of their age, income, education level, or political party affiliation.
The survey was conducted for the Americans for Secure Retirement (ASR). ASR is a group of more than 50 member and affiliate organizations representing women’s, small business, agriculture, Hispanic, and African American groups as well as the life insurance industry. The organization is committed to raising awareness about the retirement challenges facing Americans and advocating for policies that help Americans secure a steady stream of income for their retirement.
It’s Not Happy Data
The most recent poll surveyed 800 registered voters and the result was that 88% of them feel concerned about the standard of living they will be able to afford in retirement. Just one year before the survey response was 73% of people were concerned about maintaining their standard of living as they enter their retirement years. Pollsters say that the continued lack of jobs, price volatility in gasoline, food and healthcare has really spooked some people who are now re-thinking their retirement plans entirely. People are also fed up with the incivility and rhetoric coming out of Washington D.C. from lawmakers who appear to be more interested in political games that in resolving the important issues that are before the country.
Fifty-percent of survey respondents said that Congress should not cut Social Security or Medicare benefits. People fear that reducing Social Security benefits will have the most impact on their ability to maintain a stable standard of living while retired. Survey participants said that Congress should provide tax incentives to help people save for retirement. In a report from the Congressional Budget Office (CBO) in August it was detailed how Social Security is the federal government’s single largest program by expenditures – accounting for 20% of all federal payments per year. This paints a huge target on the back of social security benefits recipients and raises “retirement vulnerability” to a new level.
Haven’t We Heard this Before?
Yes, in 2008 Ernst & Young, the Big 4 public accounting firm conducted a similar study for ASR in hopes of pinpointing the critical issues that trouble Americans about planning for retirement and living in retirement. One key learning from the survey was that 90% of people who expect to live on Social Security benefits alone will outlive their income and assets without another source of income – preferably from a guaranteed source such as a lifetime annuity from a life insurance company. Bottom line – people don’t believe that lawmakers are aware of the seriousness of the issue and aren’t listening to constituents anymore.
As mentioned above “retirement vulnerability” is now an area of study attracting new funding and further research efforts and to that end, new studies that have focused on other related topics now find themselves being linked by seeming disparate data points. A poll by Wells Fargo Bank/Gallup Investor and Retirement Index now reveals that nearly two-thirds of people feel that they have little or no control of their efforts to build and maintain their retirement savings in the current environment. Therein lies the problem – people want to take charge of their retirement and are willing to participate – but when they see continued unemployment, market volatility and a lack of political consensus – they throw up their hands.
Anyone planning to retire someday must take charge and remain in charge of their plan – regardless of the markets, economic condition or politics. When investing for the future – whether it’s your retirement, your children’s education or your parent’s welfare – you are responsible for your retirement and you can’t outsource that responsibility.