More than half of retirees responding to a LIMRA survey say changes to Medicare, Social Security programs and increased taxes will affect their ability to afford retirement.

“These concerns, as well as inflation, are top of mind for all retirees but especially true for those with the lowest incomes and assets, who can least absorb additional unexpected costs during retirement,” said Marie Rice, corporate vice president, LIMRA Retirement Research. “With so many lawmakers talking about cutting costs to reduce the growing deficit and the financial implications resulting from it, retirees who might have felt secure that their retirement savings would last their lifetime, now recognize the uncertainty of the times and how vulnerable they are.” [See related: Volatility top of mind for Boomers and advisors]

The research was presented last week at The Retirement Industry Conference.

More than 85 percent rely on Social Security and three-quarters benefit from a traditional pension plan for their income, according to LIMRA's research. Forty-four percent of retirees listed investments and taxable savings as an income source; 35 percent an annuity (8 of 10 have a deferred annuity); and about a fourth mention employee earnings, defined contribution plans and IRAs funding their retirement income. More than half of their income is used to pay for basic living expenses.

“A significant change in public policy like Social Security and Medicare benefits could be disastrous for many retirees – particularly those with lower income and asset levels,” noted Rice. “For future retirees who will likely not have a pension plan to rely on, it will be important that they increase their current savings patterns and think about retirement income solutions including guarantee investments that will adjust for inflation. Our industry is uniquely qualified to provide solutions to protect retirees and help them achieve their financial goals.”

The study also found that less than half of retirees worked with a paid professional advisor to make investment decisions and only 22 percent had a formal written plan [See related: Retirement advisors ignoring middle-income Americans]. Prior LIMRA research has discovered that retirees who have a formal written plan are far more confident in their financial well being than those who don’t.

“Our industry has tools and guidance available to those who seek it,” continued Rice. “Especially during Financial Literacy Month, it is important we, as an industry, redouble our efforts to engage and educate Americans about the importance of adequate savings behaviors and sound retirement planning and the repercussions to those who fail to do so.”

Instant Insights /

Seniors fear public policy will derail retirement plans

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