Harris Poll recently conducted an online survey on behalf of the Nationwide Retirement Institute to gage Americans' outlook on retirement. There were 1,012 responders (i) age 50 or older, (ii) retired or planning to retire within the next 10 years, and (iii) collecting or expecting to collect Social Security benefits. Their responses are sobering.
Key findings? While 21% of future retirees believe their lives in retirement will be better, 28% of recent retirees reported that their lives in retirement are actually worse. Over three quarters of them cited insufficient income and the high cost of living as the main culprits for their worsened standard of living. One third also cited health problems and associated health care expenses as key factors interfering with a comfortable retirement. Seventh-five percent of these individuals stated that their health problems arose earlier than they had expected with a majority of them stating that the problems arose at least five years earlier than they had anticipated.
In addition, 78% of the responders expressed concerns about Social Security, with many worried that funding will run out during their lifetimes and that the present administration will reduce Social Security benefits. However, there was a disconnect between the age future retirees stated they planned to start collecting Social Security benefits (age 65), and the age most retirees actually commence those benefits (age 62). That disconnect is concerning because over 90% of the older responders did not understand the basic factors impacting the amount of their Social Security benefits. [For example, if you were born between 1943 and 1954, meaning your full Social Security retirement age is 66, your benefit starting at age 62 is reduced 25% from the full amount available at age 66, but is increased 32% over the full amount available at age 66 if you wait until age 70.] Perhaps not surprisingly, over a quarter of current retirees indicated that their Social Security benefits were less or much less than they had expected.
Obviously, educating older Americans as to the factors for maximizing their Social Security benefits could help close the gap between retirement expectations and retirement reality. Working longer, if you are able, would also help (assuming you save some of that additional income for retirement).
Finally, studies reveal considerable confusion about Medicare with many pre-retirees erroneously believing their health care costs will be free once they are on Medicare. However, Medicare does not cover copayments, coinsurance, or deductibles. Nor does it cover routine eye care and foot care, most dental care, hearing aids or exams, or nursing care. These expenses can add up quickly and deplete your retirement savings if you are unprepared. If your employer provides health insurance benefits, this may be another good reason to keep working longer if you are able.
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