Being able to retire as planned is considered to be one of the cornerstones of the American Dream, but today’s retirees are facing a series of challenges that are forcing them to rethink or postpone their retirement plans.
A recent ING survey finds that less than half of respondents consider themselves only “somewhat prepared for retirement,” with nearly a third (31 percent) saying they are “not very prepared.” Across ethnic groups, an equal percentage of whites and Hispanics (18 percent) include themselves in the latter group.
Retirement planning is more crucial than ever, notes retirementegg.com, which recently considered the obstacles that are hindering people from achieving their retirement goals.
Among them is a growing life expectancy, which finds people living longer but saving less. It is estimated that baby boomers will need retirement savings of between $500,000 and $1 million at age 65 to maintain their standard of living. On average, though, Americans ages 55-64 only have $271,701 in their retirement accounts.
Unlike past generations, retirees may not be able to count on social security for financial assistance. At the same time, companies are increasingly steering away from defined contribution, or pension, plans for a 401(k), which does not guarantee life-long income and is subject to market instability.
Inflation, too, is as ever on the rise, as are healthcare costs, which ranks among the primary retirement concerns, along with running out of money
The ING survey found that insufficient income and a high level of debt are the biggest barriers to retirement saving. Credit cards were cited by nearly all respondents (91 percent) as their primary form of debt, followed by a mortgage (65 percent) and a car loan (44 percent).
Reducing debt tops the list of short-term goals for 54 percent of respondents. It is an even higher priority for African-Americans (63 percent). For nearly a quarter of respondents (24 percent), creating an emergency fund ranks second. These priorities are switched when it comes to long-term goals.
And yet about half (49 percent) of respondents spend only "a little time" thinking about retirement, while less than a third spend "some time" considering their senior years. And less than half of respondents (43 percent) have calculated how much money they will need to have in retirement, and only 29 percent have a formal investment plan.
