Majority of 60-65 year olds don’t expect to be able to replace at least 75% of their last paycheck with retirement income
NEW YORK, September 13, 2022–(BUSINESS WIRE)–According to the 2022 Schroders Survey of Retirement in the United States, 86% of non-retired Americans age 45 and older are aware that they could receive higher Social Security payments by delaying retirement. their benefits begin, but only 11 percent of respondents plan to wait until age 70 — the age at which a person reaches their maximum monthly benefit — to start collecting their Social Security benefits.
Nearly a third (32%) said they would collect benefits before age 70 because they fear Social Security might run out of money or make no more payments, and 31% said that they expected to need the money sooner.
Nearly half (48%) of non-retired Americans surveyed plan to start collecting Social Security between ages 62 and 65 (before reaching full benefit age), 19% plan to file between 66 and 69 and 22% are not sure when they will claim Social Security.
Even among those who are not retired and approaching retirement age (60-65), only 11% say they will take their benefits at 70. Why ? Because they will need the money sooner, according to 38% of these respondents.
What period of life after age 65 do non-retired Americans expect to be the most expensive? The early years, according to almost half. More precisely:
65-74 years: 49%
75-84 years: 30%
85 and over: 21%
“Delaying Social Security to increase your benefits is a proven way to generate more income in retirement, but it’s a path few are willing to take,” said Joel Schiffman, head of strategic partnerships, Schroders. “This confirms what we found in our survey last year when we first saw that only 10% planned to wait until age 70 for higher benefits. Given the increase life expectancies and widespread concerns about not being able to live comfortably without a salary, the benefits of creating a retirement income strategy that maximizes your Social Security benefits cannot be overstated.”
On the threshold of retirement, income replacement needs are low or confusing; Third party terrified that paycheck will disappear
Among non-retired respondents close to retirement (60-65 years old), 55% do not believe they can replace 75% of their last paycheck with retirement income. And the vast majority don’t think they will have to: just 23% said they needed to replace 75% of their last salary to live comfortably. They are most likely to say they will need to replace less than 50% of their final salary (27% of respondents).
Worryingly, nearly a quarter (23%) of those nearing retirement (60-65) have no idea how much monthly income they will need to generate in retirement to live comfortably; and most are concerned (53%) or terrified (33%) about not having a regular salary.
No retirement income strategy in sight for one in two retirees
According to the survey, the three most popular strategies retirees use to generate income include:
Systematic withdrawals from retirement accounts (e.g. IRA, 401k plan) (29%)
Dividend-paying stocks or mutual funds (18%)
However, about half of all retirees (49%) surveyed said they have no strategy for generating retirement income and withdrawing money when needed.
Strong demand for retirement income solutions in DC plans
About half (48%) of survey respondents who currently participate in a workplace retirement plan (e.g., 401k, 403b, or 457 plan) said their plan offered retirement income products, while 19% said the scheme had no income products, and 33% were unsure. Of those who don’t have or don’t know if they have a retirement income product in their plan, 62% said they would like to have one.
Of those with a plan that offers a retirement income product, nearly 9 in 10 (89%) said they would likely use the product when they retire, keeping the assets in their plan employer.
The top five features that pension plan members look for in an in-plan retirement income solution include:
Lifetime income (52%)
Constant monthly income similar to a paycheck (49%)
Low fee/cost (42%)
Liquidity/Access to money whenever they want (40%)
Protection against market corrections/market declines (39%)
“Further progress needs to be made to help defined contribution members move from saving to spending,” Schiffman said. “The SECURE Act has been a critical step in bringing retirement income to the forefront and has made it easier for plan sponsors to introduce insured solutions into DC plans. However, much more needs to be done to educate plan members on the importance of higher income replacement, and that comes with planning retirement income early in their careers. »
For more information on the Schroders 2022 U.S. Retirement Survey, visit www.schroders.com/dc.
About the survey
The 2022 Schroders Survey of Retirement in the United States was conducted by 8 Acre Perspective among 1,000 American investors between the ages of 45 and 75 nationwide, from February 17 to February 28, 2022. The median household income of American workers surveyed was $75,000. The survey included 317 respondents with employer-provided defined contribution pension plans.
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Jennifer Manser O’Rourke, Corporate Communications Manager, North America