These retirement stats are shocking! Are you ready?
A time of relaxation. This is how most people imagine retirement, but in reality, before achieving this, you need to focus on the financial aspects. It’s hard to relax when your finances are not on point. Planning in advance is the best thing you can do, but this whole process might seem long and daunting.
Because of this, you need to learn the essentials and try to focus on them. There are a few key elements many people struggle with, and these retirement stats highlight all of them. Be aware that some of them will shock you, and realizing how many people are unaware of basic things is hard to cope with.
Take them as a glimpse into the reality of retirement, and even more importantly, learn from them and avoid making the same mistakes. Evaluate where you are standing and plan your retirement in the best way possible.
These are some of the most alarming retirement stats from the past years. Improve your life now!
1. 47% of retirees face higher costs than planned
If you believe retirement is a time to relax and enjoy the fruits of years of hard work, you might be wrong because there are many retirees out there who are facing financial challenges that exceed what they were anticipating.
According to a report by Schroders, 47% of retirees find that their expenses are higher than they initially expected. This is almost half of the questioned retirees, and we consider these retirement statistics a real wake-up call for anyone who is currently saving for retirement.
When there is such a discrepancy between expectation and reality, there is room for a lot of consequences, and most people are not prepared for something like this. Retirement is very different from the working years, and getting additional money is harder than it used to be. Most retirees rely on fixed incomes from pensions, Social Security, and savings.
So, if you are not careful, stress and a lower standard of living are there waiting for you to make a mistake. Hopefully, if you’re still in your saving phase, you can do this savior move: always overestimate future expenses.
Medical expenses, inflation, or changes in lifestyle all can happen, and if you’re not ready, the results can be disastrous. Try to adjust your saving plans and be sure that you are getting the nest egg that will be sufficient for all your needs, including the ones that are not anticipated.
Read on and discover more retirement stats!
2. Three-quarters of Americans over 50 are anxious about the future of Social Security
What do you think about the potential insolvency of Social Security? 75% of adults over 50 are worried about this, according to reports from CNBC and Investopedia, and of all retirement statistics, this is truly a concerning one.
This makes us think about what will happen to the financial backbone of American retirement. In case it becomes weaker, there is a chance millions will remain without the base support, and this can be a terrifying economic disaster.
It is true that Social Security insolvency concerns are not new but have intensified in recent years, and this is right now one of the most discussed retirement statistics. The Old Age and Survivors Insurance (OASI) program is fully funded only until 2033. This is a fact we know for sure, but what will happen after that date?
A legislative intervention is needed or the program will fall down. Now, this is not the most realistic scenario, but this is what scares most people. If we were to imagine what would happen in reality, it is that if things don’t work out as planned, the benefits will be reduced and not totally eliminated. But again, this is not favorable for anyone, and of all the retirement statistics, this is the one that scares the most people.
3. Early Social Security claims are expected by 40% of financial planners
Believe it or not, there are many Americans planning to take their Social Security benefits before reaching the full retirement age of 67. More exactly 40% of them reported that they want to start their benefits between ages 62 and 65. This means they will get less money than what they would have gotten if they had waited until full retirement age.
If you were born in 1960 or later, the full retirement age is 67. If you decide to take your benefits at 62, you will receive only 70% of the payout. On the other hand, if you wait until 70 years old, this will increase the payout to 124%. These are some retirement stats every American should know, and we are here to give you the information.
There are many factors that make people want to retire, from financial necessity and health concerns to simply the desire to leave the workforce sooner. This decision is complex and it depends from individual to individual, but getting your retirement stats straight means you are more informed and, in the end, more prepared to make the right decision for you.
4. 28% of retirement plan participants are unaware of their investment allocation
Another concerning one of the retirement statistics says this: 28% of retirement savers are unaware of how their assets are allocated within their retirement plans! Most of them rely on financial advisors and pension plans to manage their retirement savings, but this lack of knowledge is not a good sign.
It is true that trusting a professional to take care of your money is a good strategy, but you should also understand how the system works because blind trust is dangerous and can have severe consequences.
Understanding how your assets work is the best way to maximize your savings and help you avoid potential mistakes. Review your portfolio regularly, always ask questions, and make various adjustments when needed.
5. The lack of emergency savings is a reality for 24% of retirees
Yes, 24% of retirees report having no emergency savings. Maybe these retirement stats don’t seem important at first glance, but such savings are a cornerstone for a happy retirement, and having them is just like having a safety net. When something unexpected happens, you have the money to take care of yourself.
Those who have no emergency savings generally will take money out of retirement accounts, and this is a bad strategy that creates debt and destroys retirement contributions. This creates financial instability and, in the end, can make your retirement unpleasant.
So, one of the most important steps you can take is to build an emergency fund. Sacrificing your long-term goals is not worth it, and unfortunately, not so many people are aware of this. Experts recommend having three to six months’ worth of living expenses saved in an easily accessible account. This is going to be your emergency account.
If you want to learn more about how you can boost your retirement finances and how to manage them better, this book can truly help you: The Retirement Planning Roadmap: A Simple 7-Step Guide to Navigating Your Retirement Goals with Confidence, Strengthening Financial Security and Ensuring Peace of Mind in Your Golden Years
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