Baby boomers may be entering retirement in droves, but their lack of knowledge about how well prepared they are—and how much expenses will run once they’re out of the workplace—could sink their plans, as could their overall lack of preparation.
That’s according to a survey from the Indexed Annuity Leadership Council, which found that 60 percent of respondents believe they’ll need less than $1 million in retirement.
That doesn’t seem all that possible when you consider that experts believe health care costs alone will run the average retiree $250,000. While 27 percent of respondents said they’d need more than $1 million, a disturbing 13 percent just flat-out didn’t know.
Asked how much the average Social Security benefit amounts to, 31 percent didn’t know that either—the average check is $1,234, which certainly isn’t enough to see someone through retirement—while 39 percent overestimated how much they’d get.
And considering that 18 percent of respondents said they had nothing saved for retirement, while another 7 percent put the figure at less than $5,000, that’s not a good sign. Particularly since another 7 percent had only put by somewhere between $5,000 and $24,999.
Asked about their budgets and priorities for those budgets that topped retirement, the majority cited paying off debt, at 52 percent. They were allowed to choose multiple answers, and they did; other priorities they saw as greater than retirement savings were the following:
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buying a car or house (16 percent)
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travel (also 16 percent)
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entertainment (7 percent)
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college savings for their children (5 percent)
With all those competing needs, it’s fairly easy to see why retirement gets short shrift. And it’s somewhat worrisome to see that more than 40 percent of boomers put “lifestyle” purchases ahead of retirement.
Respondents were also asked if they knew of retirement products outside of Social Security that can provide guaranteed retirement income. While 50 percent said there were, 35 percent didn’t know and 13 percent said there were not.
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