Retirement could be a stressful phase in your life if you did not do any prior planning before you became a retiree. This is because you need to put food on your table and pay bills like medical expenses, electricity, and water bills. However, with a proper retirement plan, you can be confident that you can still enjoy comfortable living. You need to save for retirement as soon as you start getting a stable income. You can also seek the services of a financial advisor that can help you plan appropriately for retirement.
Whether you are retired or working, are you confident about your retirement? Can you sustain your current living conditions after you retire and all through your retirement period? Thinking about this can give you sleepless nights. In fact, a survey carried out this year shows that 61% of Americans are stressed about planning for their retirement. However, it is possible to be more than confident about your retirement.
According to the Retirement Confidence Survey (RCS), a large number of Americans are confident about their retirement. The RCS is responsible for doing annual surveys on how Americans feel about their retirement confidence. Two major groups of people are involved in their survey; working and retired individuals.
From the 2019 surveys, both workers and retirees are confident that they can maintain comfortable living throughout their retirement. Out of 10 American workers, seven are confident about their retirement. Similarly, out of four retirees, three are confident about their retirement. However, when it comes to confidence in paying medical expenses during the retirement period, only 67% of working Americans were confident. In conclusion, retirees were generally more confident in meeting their overall retirement than being able to pay their medical expenses.
However, recent RCS surveys show there was a drop in the retirement confidence of retirees over the last two years. In 2020, RCS reported that only 77% of retirees were confident, which was a drop from 81% of confident retirees reported in 2019. Two areas contribute to the retirement confidence of retirees; their reliance on income in the form of Social Security and Medicare for medical expenses. Out of 10 retirees, nine of them rely on income from Social Security, while two out of three rely on Medicare to pay their medical expenses.
The number of working Americans who see the need to calculate their retirement savings is increasing each year, which is why most Americans are confident about their retirement. In 2018, only 38% of workers had calculated their savings. The numbers increased by 4% in 2019 and an additional 6% in 2020.
Furthermore, working Americans report a rise in the amount of savings they need for retirement. This could be due to the coronavirus pandemic crisis that affected many businesses, the value of the country’s currency, and lead to a rise in unemployment numbers. According to the survey, both retirees and workers aim at maintaining their usual lifestyle during retirement. Therefore, they consider it a factor while making retirement calculations.
Out of 10 workers who have calculated their retirement savings, four claim that they need at least $1 million to sustain their lifestyle and also pay their medical expenses. In contrast, only 26% of retired workers who made such a calculation found that they would need $1 million to retire comfortably.
After workers make such calculations and try to save retirement money, they face some obstacles during saving. The biggest hindrance that workers face in trying to save for retirement is meeting their financial goals. Some of these financial goals include saving up for their children’s college funds, paying off their mortgage or buying a home, setting aside money for vacations, and buying the car of their dreams.