How do you imagine your retirement? Relaxation or hectic? Calm or anxious?
Throughout previous generations it was thought that years in retirement were supposed to be filled with sleeping in, traveling the world, participating in scuba diving classes and spending time with your grandchildren (PDF) (perhaps even great grandchildren). Nowadays, though, the winter years could very well be filled with constant worrying and living a perpetual lifestyle of paycheck to paycheck.
Other than living in lackluster economic conditions, Americans aren’t saving for retirement, according to the results of a survey conducted in January by Franklin Templeton Investments. The study discovered that more than one-third (39 percent) of pre-retirees across all age demographics aren’t saving for retirement.
Although the conclusion of the survey spells a dire warning, there were some mixed statistics. For instance, 72 percent of pre-retirees noted that they are looking forward to retirement, but only one-quarter of all respondents said their retirement will be better than the previous generation’s and another 41 percent think it’ll be worse.
Furthermore, nearly half (48 percent) are concerned that they might outlive their assets and possibly downsize their retirement plans – 44 percent said the same thing a year ago, suggesting the personal financial situation has worsened for many.
One-fifth of respondents have already made the decision that they will never retire.
“Americans have long struggled with preparing for the realities of retirement,” said Michael Doshier, vice president of Retirement Marketing for Franklin Templeton Investments, in a statement. “The survey uncovered several contradictions related to the degree of understanding and often divergent approaches to retirement.”
What advice do current retirees have for their younger counterparts? More than three-quarters (79 percent) recommend to save early, regularly and consistently.
“Retirement saving has been a concern for a long time and, with the government’s recent focus on the issue, it is our hope that Americans will begin to use the resources available to them to better plan for what’s next,” added Doshier. “There are a few simple steps you can take to prepare for what’s next, including acknowledging your own retirement goals and concerns, learning about the various sources of income and matching them to your likely expenses. A financial adviser can help you establish a retirement income investment plan tailored to your future needs and aspirations.”
We reported last week that close to two-thirds of households with an income of less than $100,000 were worried about their personal financial situation and more than half were living paycheck to paycheck.
Previous studies have indicated that many are depending on their nation’s Social Security as opposed to relying on their lifetime of savings, investments and other assets. In Canada, a little more than a third (34 percent) is hoping to win the lottery in order to fund their retirement plans, according to a survey commissioned by the Bank of Montreal.
Chris Buttigieg, a senior manager of wealth planning strategy at BMO, actually commented on this revelation:
“To those hoping to win the lottery to fund their retirement, the odds of actually winning are approximately one in 14 million. A much better bet would be to develop a personal retirement savings and investing plan and to start contributing as early and as often as possible to your RRSP.”
Most finance experts suggest individuals to save for retirement by making a plan, producing a saving rhythm, maintaining a diversified portfolio, living within your means and perhaps even consider preparing for a part-time job during your golden years.
