Retirees Concerned About Their Finances

By Mazur, Michael

With the costs of gasoline and food going up, it is no wonder that inflation is weighing heavily on the minds of many Americans. A new survey by the Society of Actuaries (SOA) showed such angst to be hitting retirees particularly hard. The Risks and Process of Retirement Survey Report analyzed pre-retirees’ and retirees’ awareness of the financial risks they face in retirement, as well as how they are coping with those risks. The 2007 survey was conducted through telephone interviews of 801 adults ages 45 to 80 (400 retirees, 401 preretirees).

With more health awareness and better health care, Americans are living longer. Upon reaching 65, the average life expectancy is 17 years for American men and 20 years for women. In addition, close to one-third of women and close to 20 percent of men age 65 are expected to reach age 90. But with longer life spans come concerns about financial costs. Taking into account the costs of health care and long-term care, as well as dealing with inflation in general, those surveyed are fearful of not being able to maintain their standard of living-even of outliving their assets.

Sixty-three percent of pre-retirees fear the effects of inflation on retirement; 57 percent of retirees do. Interestingly, in all of the top categories regarding retirement risks, pre-retirees seemed more worried about the financial future than retirees.

The report points out differences in how retired men and women view their economic futures. Women more than the men surveyed seem to have a greater concern about how higher prices will affect their financial situation. While 51 percent of men expressed concern regarding inflation risks, more women (62 percent) had that concern. In addition, more women than men expressed the fear of depleting savings (52 percent, 37 percent respectively).

When it comes to combating the financial risks inherent in retirement, pre-retirees place a greater value in having insurance to protect against unexpected events and the financial consequences they might bring on then do retirees. Seventy one percent of preretirees feel it is very or somewhat important to buy insurance as opposed to 61 percent of retirees.

Finally, a look back shows that the retirement risk fears remain somewhat consistent although they are stronger now. In 2007 retirees were more likely than in the previous years of 2001 and 2003 to say they are very concerned about not having enough money to cover long- term health care such as i n a nursing home or at home.

Information on the report can be found at http://www.soa.org/ news-and-publications/newsroom/retirement/aefault.aspx.

Copyright America’s Community Bankers Jul 2008

(c) 2008 Community Banker; Washington. Provided by ProQuest Information and Learning. All rights Reserved.