For many Americans, the dream of retiring at 61 and living up to a hundred years has become a common aspiration. However, it presents the challenge of funding their extended post-retirement life. According to research by Corebridge Financial, around 1 in 8 workers aspire to this lifestyle. Yet, most are far from meeting their retirement savings goals, with only 27% being extremely confident about not exhausting their savings.
The average retirement savings for those aged 55-64 is around $185,000. If we consider the average annual expense of $50,860 for people over 65, the savings could only last for around three and a half years. This highlights the potential risk of financial insecurity midway through their retirement.
The survey also revealed that only four out of ten respondents are confident of having enough savings to live comfortably for 20 years post-retirement. This leads to a significant concern regarding financial stability in the twilight years. Worryingly, 30% of Americans above 59 have no retirement savings at all. They rely on Social Security, which covers only a small fraction of pre-retirement earnings.
In fact, it’s found that only 10% of individuals aged 62 to 70 are retired and financially secure. This emphasizes the importance of ambitious financial planning and substantial saving strategies for future retirees. Furthermore, there is a urgency for policies to support the financial stability of older US citizens.
Alongside the financial aspect, longevity risk, or underestimating life expectancy, is a crucial factor to consider when planning for retirement. Living to 100, or even beyond, could potentially be the norm, further strengthening the need to enhance and adjust personal retirement plans accordingly.
In a positive light, the younger generation is already taking steps in the right direction. For instance, 30% of Gen Z have already started planning for their retirement, displaying a proactive approach towards their future. These young individuals have already started investing in retirement plans such as 401(k)s or IRAs, setting a sample for others to follow.
Bryan Pinsky, a financial expert, advises starting to save for retirement early and suggests the regular evaluation and adjustment of these plans. He emphasizes that it’s never too late to start investing and each individual, regardless of their age, should prioritize retirement planning for a secure future.
