You might think that a simple question about the adequacy of retirement funding would derive an unequivocal answer. The truth is that just a cursory search of recent studies on the subject reveals large discrepancies in their results.
Depending on how the question is framed, 29% – 71% of those surveyed in research over the past few years confirm that this is the case adequately prepared for retirement. Of course, these answers are self chosen and many people believe (incorrectly) that their cost of living in retirement will be a fraction of their early retirement expenses. Hence, your definition of “adequately prepared” may be wrong.
One of the more interesting current studies was carried out by Harris Poll for TD Ameritrade in late 2019. The audience for this survey was equally divided among 40, 50, 60, and 70 year olds.
The following graphic from the Harris / TD Ameritrade survey shows how certain professional (human capital) and family events may require a change in strategy / direction of retirement planning.
The events that received the highest percentage of responses that a need to re-evaluate are mostly the ones that cannot be controlled. Of particular interest are the middle categories of Health events and market events. The percentage of those who answered yes to these questions is roughly constant across all four age groups. Incredibly insightful and curious.
The Harris / TD Ameritrade poll also shows a surprisingly negative statistic. 46% of those over 40 have already withdrawn from their retirement accounts. This is symptomatic of poor planning of “things that get restless at night” and shows a lack of overall liquidity within this cohort.
The 2018 Planning & Progress study (also conducted by Harris) found that 78% of respondents were “extremely or somewhat” concerned about affording a comfortable retirement. 66% said there was some likelihood surviving retirement plan. This is a question that few people want to address directly, but one that is very important.
Everything is not good
The overarching commonality between most research is how few people are truly prepared when: a realistic version lifetime consumption including inflation is taken into account.
However, there have been several recent surveys purporting to send the wrong message that “everything is fine”, even when reality draws a very different conclusion.
66% of 50 to 59 year olds in the Harris / TD Ameritrade survey say they plan to cut their current cost of living in retirement. Our observed data A completely different picture emerges from over three decades of working with customers in the preparatory phase before retirement. Assuming good health, many families typically spend the same or more in the early years of retirement than before.
Are you on the right track
I fear that many people may find false comfort in some survey results by the time they should do so Course corrections. Our anecdotal evidence suggests that less than 20% of high income individuals in their fifties are on the right track. The actual percentage could be even less depending on how far you frame the implied uncertainty of lifetime consumption.
Even if you save / invest enough and focus on the inputs that you can control, she I can’t control an important factor … how long you will live. We are constantly reminding our clients that retirement planning is much more than just numbers, it’s not just a simple math equation.
Life is confusing and deliberate at times. ongoing planning process Because your future is the only way to create an element of clarity. Start there. Ready for a real conversation?
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