Retirement Overconfidence?

How confident are you that your retirement savings will last the duration?

In a 2006 survey, even though 73 percent of retirees indicated that they think they will have enough money for a comfortable retirement, 42 percent admitted that they are more concerned about their financial future than they were when they first retired.¹

Many workers have unrealistic expectations about how much income they will need to maintain a comfortable lifestyle in retirement. These survey results illustrate why some people may be overconfident about their retirement preparations.

Nearly 70 percent of workers expect to continue working in their retirement years to supplement their income. But it's possible that some people might have to stop working earlier than they expected as a result of downsizing, disability, or other unforeseen events. Only 27 percent of the retirees surveyed said they have actually worked for pay in retirement.²

Only 42 percent of workers have tried to calculate how much money they will need in order to retire comfortably. About 73 percent of workers who have not done a calculation simply guess.³

Sixty percent of retirees do not have employer-sponsored health care. Of those who do, 27 percent have to pay for either part or all of the insurance coverage that their employers offer.⁴

Two-thirds of retirees believe they will live longer than expected, and half of retirees think that either they or their spouse will need long-term care or assisted living.⁵

Living on a fixed income becomes more difficult when inflation is on the rise. Seventy percent of retirees believe it is likely that inflation will rise by 7 percent or more a year during their retirement.⁶

Your retirement, like any other time in your life, may be marked by financial ups and downs. A well-thought-out strategy can help you adjust to unexpected bumps and stay on the path toward a comfortable retirement.

1–6) 2006 Retirement Confidence Survey, Employee Benefit Research Institute