One-third of U.S. “transition boomers”—those aged 55 to 65 and who are less than 10 years away from retirement—remain unsure of how much money will be needed to cover basic living expenses in retirement, according to a new survey from Allianz Life Insurance.
The Transition Boomers and Retirement Income Survey also found that one-quarter of transition boomers surveyed appear to be uninformed about the effects of inflation, and more than 40% may not have a realistic idea of when they should begin their retirement planning.
“It’s alarming that so many boomers on the cusp of retirement are still unclear about the basic factors which determine their ability to fund their lifestyle once they stop working,” said Walter White, Allianz Life president and CEO. “When you consider rising healthcare costs and the devastating effects of inflation on purchasing power, the fact that so many transition boomers are still confused about retirement income planning is a significant issue which urgently demands more education.”
Of the one-third of respondents who indicated uncertainty about their retirement income needs, 64% were ages 55 to 60 and 36% were between 61 and 65. When asked about their biggest concerns in retirement, 28% noted “not being able to cover basic living expenses.”
While healthcare costs ranked as the biggest retirement concern at 32%, only 10% picked keeping up with inflation and only 6% identified taxes in retirement as a top concern.
The survey also found concerning responses about expected sources of income in retirement. The majority (94%) said they expect U.S. Social Security to play a role in their retirement income, followed by pension plans (46%), DC plans such as 401(k)/403/457 plans (43%) and “other investments” (30%). However, 30% indicated they expect some retirement income from part-time work and 20% anticipate income from either an inheritance (9%) or “other sources” (11%).
“Although many boomers say they’ll work in retirement, studies show that many may have difficulty doing so due to layoffs, health issues or the need to care for other family members,” said the company’s vice-president of consumer insights, Katie Libbe. “When only 14% say they can count on guaranteed income from an annuity and 20% expect an inheritance or income from ‘other sources,’ it’s crucial for transition boomers to start thinking and talking about retirement income issues as soon as possible.”