The biggest risk to your retirement? Unrealistic expectations.

While many people approaching retirement have actively adjusted their retirement plan to take into account recent economic uncertainty and market volatility, few recognize that an even bigger threat to their retirement nest egg is unrealistic expectations. The 2013 Society of Actuaries (SOA) Survey of the Risks and Process of Retirement shows that many pre-retirees may be in trouble as they make plans that are not rooted in retirement reality. Findings show:

You probably won’t retire when you think: While news of the burgeoning global retirement crisis suggest that many financially unprepared Boomers will be trapped in the workforce until death, it is highly likely that retirement will come earlier than expected or planned. In the survey, more than half of pre-retirees expected to retire at age 65 or later, but in reality, 52 percent of retirees exited the workforce at least six years earlier than that-with the median retirement age being 58. Moreover, even retirees who report leaving the workforce voluntarily tend to feel they were forced out at an unexpected time. Unexpected early retirement means a shortened planning horizon and accumulation period, and could have consequences with regard to entitlement benefits and standard of living throughout your golden years.

You’ll likely live longer than you think: Less than one-in-ten pre-retirees expect to live to age 91 or older. However, nearly half–48 percent of pre-retirees—reported having that their longest living family members reached age 91 or older. As family history is a primary indicator of one’s own longevity, such a sizable gap between perception and facts highlight the very real danger of being ill-prepared to finance a full retirement and underscore the importance of the need for conservative financial vehicles in retirement plan that can guarantee income for life–no matter how long that may be.

Your retirement lifestyle will likely change drastically: One of the most pronounced deviations between reality and expectations reported in the survey is that most retirees vastly underestimate the likelihood of future decline in their mental and physical capabilities as they age. While many anticipate health problems, many underestimate the cost of health-care services or discount the need for long-term care services and caregiving needs.  A whopping 70 percent of people over age 65 can expect to use some form of long-term care during their lives, and these services are generally expensive and not typically covered by Medicare.

While there are no certainties when it comes to your life in retirement, it is clear that pre-retirees need to plan ahead for a diverse range of outcomes to avoid outliving their assets.

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