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Going forward from 2013, the American work-force is slowly, but surely, coming around to looking at retirement in a completely different light than it was viewed in 20-30 years ago. Once upon a time, your retirement years were mirage-like – white-sand beaches, horseback riding in the country side, and/or leisurely wine tastings abroad. Now, they’re a little more – dare I say it – realistic?
Realistic, at least, in the sense that those planning for their retirement are actually, well, planning for their retirement – like, with a budget and everything! Why? Because our Americans nearing retirement today know full-well what economy they’ve been living in for the past decade, know that it’s still on the mend, and understand that they – unfortunately – are going to have to pick up the slack in order to get to their retirement goals.
BlackRock and the Boston Research Group recently polled 1,002 American workers with 401(k) plans and 1,035 retirees who’d previously paid into a 401(k), to find out how they perceive retirement, what they’re planning for it, and/or what they’ve already done to set up their retirement plan – the results seem to suggest that Americans are re-inventing the retirement wheel. Visit Suncorp at http://www.suncorp.com.au/super/ to help plan your own retirement.
That seems to be the trend; Warren Cormier – President of the Boston Research Group – attributes this retirement push-back to, “They are just much less confident of their ability to actually amass the dollars they need to retire. I don’t know if it’s pessimism or realism. They are not as far along in the path toward retirement as they had hoped.”
Up until recently, the retirement standard has been age 65 or sooner, with an emphasis being placed on the “sooner”. However, nowadays, it seems that 48% of workers polled expect that they’ll retire after age 64 to 65. Even with this number being what it is, though, there’s still only 19% of retirees stating that they would have been physically able to keep working past the age of 64.
Furthermore, while some statistics do show that our American work-force does want to keep working past age 65 – 40% from a recent Gallup poll – that large percentage represents those who are making over $75,000 per year. The remaining simply don’t believe that they’ll be able to support themselves in retirement just yet – in fact, 17% don’t believe that they’ll be able to retire at all.
Seems to defeat the entire purpose of retirement, doesn’t it? But – it’s happening! Out of those polled by the Boston Research Group, only 15% of American workers are planning on having a completely work-free retirement.
Of course, this is just what those polled are planning on doing and doesn’t necessarily equal what they’ll end up doing – 86% of retirees polled stated that they didn’t continue to work past retirement and couldn’t imagine continuing to work in their late 60s.
This wasn’t always the case – Americans used to have more options available once the entered into retirement.
“The current retirees take a vast portion of their income from secure income sources, such as Social Security and legacy defined-benefits plans, and they are secure in their concept of receiving Social Security,” states Cormier, “People who are actively working today, however, don’t have a defined benefit plan available to them. The only thing they have left to expect is a defined-contribution plan. It’s a completely different mix of what is available to them to pay expenses in retirement.”
Nowadays, it seems that 48% of workers expect their 401(k) to fully fund their retirement and 75% of workers expect that they’ll immediately dive into their 401(k) as soon as they can. This is a vast difference compared to what our current retirees report, with only 15% of them receiving 25% or more of their retirement income from their 401(k) – their incomes are largely supported by savings and investment accounts.