Retirement may be a stone’s throw away for older boomers but a survey finds that many are in the dark about how much it’ll take to fund their golden years.
Two-thirds of about 1,100 respondents aged 55-60, and one-third of those 61-65, say they’re not certain how much money they’ll need to cover basic living expenses once they stop working.
The findings of the Transition Boomers and Retirement Income Survey, conducted in June by Allianz Life Insurance Company of North America, seemed alarming for people at retirement’s doorstep — but without a solid road map to take them into what may be their most vulnerable years.
For instance, most workers focused on growing and accumulating assets but failed to plan how much they’ll need each year in retirement, the survey found. Nearly half of those polled say they won’t focus on retirement income strategies until they’re less than five years from retiring, a dangerous move considering their choices will be severely curtailed at that late date.
Worse yet, about one in seven actually say they plan to wait until six months to a year before retirement to start pondering strategies for retirement income.
Medical bills tend to take a huge chunk out of a retiree’s income, so it’s no surprise that those expenses ranked as the biggest retirement concern among one-third of those surveyed. Not being able to cover basic living expenses in retirement topped the list of concerns for more than one in four.
Keeping up with inflation was a huge concern for one in 10. To that end, the poll asked respondents to predict the cost of a loaf of bread in 2022, based on today’s average price of $2.50. At least in this area, people had a good grasp of numbers: About 75 percent correctly predicted the cost would double to $5.00 in 10 years. Of those who got it wrong, eight percent showed they were completely unaware of how inflation can drain purchasing power — they said a loaf of bread would cost $2.75. Others overestimated the future cost: 13 percent said the loaf would be $8.25 and 4 percent said $10.05.
The survey also found that soon-to-be retirees may not be realistic about their ability to keep money coming in. Many say they’ll continue to work part-time in retirement, but studies show that some may have difficulty doing so due to layoffs, health issues, or the need to care for other family members, said Allianz Life Vice President of Consumer Insights Katie Libbe.
Most of those polled said they expect Social Security to play a role in their retirement finances, while about half will rely on pension plans or defined contribution plans such as 401(k)s. About a third expect to count on other investments.