Seniors Worry About Affording Retirement
NEW YORK (May 19) - Americans worry that inflation and the rising cost of health care are increasing the risk that they will run out of money in retirement, according to a study released Monday.
The survey by the Society of Actuaries found that people already retired were most worried about inflation and affording long-term care. Pre-retirees, meanwhile, ranked affordable health care as their top concern, followed by inflation and long-term care coverage.
Overall, pre-retirees showed greater worries than those already in retirement, the study found.
Anna M. Rappaport, a consulting actuary based in Chicago and supervisor of the biennial report, said that one theory for the difference in the levels of concern could be that "for the pre-retiree, retirement is still an unknown."
Rappaport said she was surprised that people weren't more worried.
Concerns about health care costs, inflation and nursing home care expenses rose strongly in 2003, after the economy went through a recession and the stock market fell sharply, she pointed out.
"Now they're not as concerned as we think they should be," Rappaport said. "It's kind of out of sight, out of mind."
Rappaport also said that Americans appear to be underestimating the financial impact of the death of a spouse. About 60 percent of those responding to the survey felt there would be little impact when a spouse dies, but Rappaport said that surviving spouses often experience significant drops in income and benefit coverage, especially women.
She said that Americans need to be more aware that longevity is a significant risk. She pointed out that among today's 65-year-old population, the average man is likely to live an additional 17 years and the average woman, 20 years.
The study found both a lack of understanding about investing - which can help people grow their savings above the rate of inflation - as well as inadequate savings levels. It also found that people "do not estimate their retirement needs well."
Still, Rappaport said, many Americans are considering a step that could help - working longer.
In the latest study, some 15 percent of those still working said they expected to work in their primary occupation until at least age 66, and 28 percent said they may never retire.
The survey involving more than 800 adults age 45 to 80 was conducted in mid-2007 by Mathew Greenwald & Associates Inc. and had a margin of error of plus or minus 5 percentage points. The Society of Actuaries, a professional association and research group, is headquartered in Schaumburg, Ill.