by Phil Cannella
I came across an interesting study today which I think is relevant to everyone in or near retirement. The study, called The Future of Retirement: The Power of Planning (click here to read the report), was conducted by HSBC bank, and has been ongoing since 2005. The report compiles statistics about retirees and retirement and so far has surveyed over 125,000 people all over the globe. I wanted to share the report with you because it contains many statistics that reaffirms the things I have been telling retirees for years, namely, that they need to be prepared financially for retirement, or they risk outliving their nest eggs.
The aim of the report was to show the difference that proper planning makes when retiring.
Here are a few statistics from the report:
- 41% of those surveyed felt they were underprepared for retirement; and 64% were concerned they would not be able to cope financially in retirement.
- Nearly 1 in 5 had no idea what their main source of income would be in retirement.
- A next largest group of respondents will be depending on some sort of state pension (Social Security for example, in the United States), in spite of the fact that many of these social programs are projected to pay out less or become insolvent with the influx of new retirees.
- Almost 1 in 10 believe they will have to continue working in retirement and expect that employment to be their main source of income.
- Americans are the least optimistic about retirement compared to all other countries surveyed, with the average man expecting to retire at age 66. Men in other countries expected to be able to retire anywhere from age 58 to age 65.
- 50% of those surveyed had no financial plan of any kind. Ironically, 48% had an optimistic outlook on retirement, associating it most closely with freedom. The study also found that optimism declined as respondents got older. As respondents got older, HSBC found that began to associate retirement more with financial hardship than with wealth.
- Of that 50%, 60% claimed the reason they had no financial plan was because they didn’t have enough money to save or invest. 23% said they didn’t know how to make a financial plan; 15% said they didn’t have enough time for financial planning; and 15% said they didn’t think it would make a difference.
As a professional with nearly four decades of experience working with those in or near retirement, I can tell you that planning makes a BIG difference. That assertion is actually backed up by the data from this study. When “planners” (those who have a retirement plan) are compared to “non-planners” (those who don’t), the study found that planners amassed 245% more money for retirement than non-planners. And that’s the best argument for making a plan I can think of, because how can you expect to have a comfortable and secure retirement unless you plan for one? I think Winston Churchill said it best: “He who fails to plan, plans to fail.”
Phil Cannella is the founder and CEO of Retirement Media, Inc.