Consumers have unrealistic expectations about retirement, including when they will retire, how much money they will need and where it will come from, according to a survey by Genworth Financial Inc.
The study revealed that 73 percent of pre-retirees are confident they will retire as planned, but only 48 percent of retirees actually leave the workforce when they expect. Out of more than 1,300 people surveyed, including 700 retirees, 46 percent said they had to retire sooner than planned.
Job loss, health and family issues were the primary reasons for individuals to leave the workforce early. One-quarter of respondents said they retired early because they just didn’t want to work anymore.
Expectations about retirement expenses also don’t match reality, Genworth found, with more than half of pre-retirees expecting their expenses to decrease in retirement when in fact 65 percent of retirees found that their expenses stayed the same or increased in retirement.
A whopping 77 percent of retirees said their general living expenses increased in retirement, in large part because of increased health care costs, real estate expenses and money spent supporting dependents.
Only a small percentage, 15 percent, found that their retirement plan exceeded expectations. Twelve percent said they had saved more money than they expected.
Most retirees and pre-retirees are unsure of where their retirement income will come from, the survey found, with retirees estimating that 44 percent of their retirement income would come from pensions and 28 percent from Social Security. Pre-retirees, on the other hand, say they expect more than half of their retirement income to come from qualified retirement plans, IRAs, stocks and bonds.
Only 50 percent of consumers who work with a financial professional say they have a written retirement plan and just two out of five have distribution plans for taking income in retirement.
The survey also found that 56 percent of people who own annuities are more likely to know how much money they will have on a monthly basis in retirement, compared to 48 percent of those who haven’t purchased an annuity.
Genworth is a Fortune 500 insurance holding company.