On average retired and pre-retired Americans report they’ve lost
$117,000 in retirement savings due to unanticipated events
MINNEAPOLIS--(BUSINESS WIRE)--
Countless studies have shown that many Baby Boomers don’t believe they
have enough savings to live comfortably in retirement, but why are so
many financially unprepared? Data from the Retirement DerailersSM
survey, released today by Ameriprise Financial (NYSE: AMP), helps answer
the questions many have about the retirement crisis in America.
The Retirement DerailersSM survey found that the vast
majority (90%) of Americans ages 50-70 with $100,000 or more in
investable and retirement assets have experienced at least one
“derailer” – an economic or life event that has made an impact on their
retirement savings goals. The average respondent experienced four of
these events, which range from derailers that are beyond their control
such as the effects of the recession, to family and lifestyle choices
that have lasting financial consequences. In the end, these events set
respondents back $117,000 on average. In fact, nearly two in five of the
respondents (37%) experienced five or more unanticipated events costing
them approximately $144,000.
“Expecting the unexpected is clearly more important than ever in
preparing for retirement,” said Suzanna de Baca, vice president of
wealth strategies at Ameriprise Financial. “We know the recession had a
huge impact on American pre-retirees and retirees, but families are
realizing that other unexpected events like supporting a grown child or
grandchild can also hit the bottom line – both immediately and
long-term. The good news is that these unanticipated events don’t always
have to be retirement derailers – they can be addressed with a plan in
place.”
Retirement Derailers are Common…and Costly
Unexpected expenses come in all shapes and sizes both before and during
retirement, but there are a few that rose to the top. The top three most
cited derailers are, not surprisingly, related to the recession. Nearly
two-thirds (63%) of respondents say low interest rates impacted the
growth of their investments. More than half (55%) say their savings were
significantly lowered due to market declines and one-third (33%) admit
their home equity is now not going to help fund retirement as much as
they expected.
Still, many respondents experienced life events that derailed their
retirement. One in four (23%) are supporting a grown child or grandchild
and just as many (23%) say their pension plan is not worth as much as
they’d thought or has been discontinued. What’s more, one in five
respondents’ retirement goals have been thrown off track due to making
bad investments (22%), taking social security before retirement age
(19%) and/or experiencing a job loss (18%).
While it appears that Boomers have found a way to “make it work” in the
short-term as they weather these unexpected derailers, they may not have
the ability to be as resilient after they leave the workforce. Only 33
percent of respondents say they are extremely or very confident they
would be able to afford an unexpected expense such as large home repairs
in retirement.
Despite Being Behind on Savings, Americans Still Anticipate a Stable
Retirement
Nine in ten respondents admit to having had at to at least one bump in
the road, but 64 percent still describe their road to retirement as
“smooth” rather than “bumpy”. However they might not be considering the
full impact the derailers they’ve experienced have had. Fewer than one
in five (18%) say their savings are ahead of where they thought they’d
be ten years ago, and 42 percent admit they’re behind.
To what extent do they consider themselves derailed? More than half
(55%) of those who’ve been derailed at least once say the impact on
their finances has been extremely or somewhat serious. This number rises
to 83 percent of those who’ve experienced five or more derailers.
This sobering statistic is followed by yet another apparent disconnect;
only one-third (35%) agree that the financial loss caused by the
derailers they experienced will affect their ability to afford
essentials in retirement by a lot or a fair amount. Those who
experienced five or more derailers are telling a different story – three
in five (60%) say affording essentials in retirement will likely be more
difficult due to the savings lost to derailer events.
Regrets? They Have a Few, but they also Have Plans to Get Back on
Track
More than half (56%) of respondents point the finger at others for their
financial situation, but that’s not to say that they don’t take some
responsibility. When it comes to what they would do differently if they
could do it over again, 57 percent say they would’ve started saving
earlier. Younger generations should also take note that in addition to
saving earlier, many Boomers express that they think they’d be in better
financial shape if they had known more about investing (37%) or if they
had spent less on extras like eating out and vacations (33%).
Boomers have a few ideas for how they’ll get back on track – and for
most (80%) it starts with themselves. More than two in five also plan to
rely on a spouse (44%) or a financial advisor (42%) to get their
retirement finances back on track. This group may be on to something –
those who work with a financial advisor are much more likely than those
who don’t to have a written financial plan (74% vs. 39%), and survey
results show having this kind of plan in place can boost confidence and
make for a smoother path to retirement.
“Ninety percent of us will likely be faced with at least one of these
big events at some point in our lifetimes,” added de Baca. “Being ready
for these derailers and having a written plan to help manage through
them can make a world of difference when it comes to securing a long,
successful retirement.”
For more information about the study, see our Retirement
DerailersSM research page. To hear additional
insights from Suzanna de Baca, visit YouTube.com.
About the survey
The Retirement DerailersSMsurvey was
created by Ameriprise Financial utilizing survey responses from 1,000
employed and retired Americans ages 50-70. All respondents have
investable assets of at least $100,000 (including employer retirement
plans, but not real estate). The survey was commissioned by Ameriprise
Financial, Inc. and conducted via telephone interviews by Koski Research
from February 21 - February 28, 2013.
About Koski Research
Koski Research is focused on having better conversations with key
stakeholders – customers and clients, influencers, business peers and
the general public. The firm combines high level proprietary custom
research with research conducted for public release. All of this
research relies on asking engaging questions, applying research acumen
to create solid study designs and using marketing smarts to produce
executive-ready reports that lead to action.
About Ameriprise Financial
At Ameriprise Financial, we have been helping people feel confident
about their financial future for over 115 years. With outstanding asset
management, advisory and insurance capabilities and a nationwide network
of approximately 10,000 financial advisors, we have the strength and
expertise to serve the full range of individual and institutional
investors' financial needs. For more information, or to find an
Ameriprise financial advisor, visit ameriprise.com.
Brokerage, investment and financial advisory services are made available
through Ameriprise Financial Services, Inc. Member FINRA and SIPC.
© 2013 Ameriprise Financial, Inc. All rights reserved.
Ameriprise Financial, Inc.
Chris Reese, 612-678-5410
Media
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Chris.L.Reese@ampf.com
Source: Ameriprise Financial, Inc.