Retirees are feeling the pinch — and panic — around their prospects for a financially secure retirement.
According to a new survey from real estate data platform Clever, 66% of current retirees believe the U.S. is in a retirement crisis, as 19% of those surveyed have already blown through their retirement savings, and 40% are concerned their savings won't last their lifetime.
While the average retiree has $142,500 in savings, Clever found, that's not enough to keep up with the rising cost of living and exorbitant healthcare expenses retirees can expect to face in their later years. Women are in even more dire circumstances: Clever found the average retired woman has $100,000 saved for retirement, compared to $217,500 for men.
For the majority of retirees surveyed, the costs they're experiencing have come as a surprise. To fill these financial gaps, 12% of current retirees are relying entirely on Social Security, while 47% are spending less. Ten percent are moving their investments into less risky options, and 8% are simply prepared to lose money over time.
"Retirees who aren't sufficiently prepared will have to make serious sacrifices or risk outliving their savings," says Matt Brannon, the author of Clever's research. "Our survey found some retirees have skipped meals or medical care to preserve their savings. It's not how anyone wants to spend what are supposed to be their golden years — living in financial hardship, often in poor health, with no real sense of control."
Why are retirees so unprepared? While 87% of employers with more than 100 employees offer a retirement plan, according to retirement plan provider Guideline, 33% of those surveyed by Clever said they did not know how much they would need to save, while 28% never took the initiative to set up a retirement savings account.
Additionally, many current retirees were never able to save any extra money in the first place. Sixty percent of those surveyed said they lived paycheck-to-paycheck before retiring, and 41% were hit with unexpected expenses that derailed their finances.
While retirees are willing to take some of the blame, they're also pointing the finger at their former employers, who they believe could have done more to set them up for success. Fifty-five percent of retirees said their employer could have done more to help them save, and 41% did not participate in their employer's retirement plan options.
"Companies are usually trying to minimize costs, but cutting corners on retirement benefits is going to cause problems," Brannon says. "Keep things simple for employees. Don't force them to make a lot of decisions when setting up their retirement benefits, because you risk them being overwhelmed by options and putting off those decisions indefinitely."
As employers continue to invest in financial education, and new federal legislation like SECURE 2.0 is addressing many financial pitfalls workers face in planning their retirement, it's crucial the message being given to employees is clear: Save early, save often and know there are benefits available to help.
"Employers should set up their retirement plans to automatically include new employees, without them having to opt in, and on a broader scale, anything that encourages and reinforces the importance of saving," Brannon says. "Employers can't afford to ignore the fact that workers are anxious about retirement. Employees feel more invested in a company's success when a company shows it is invested in their success."
Source: EBN
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