A new Society of Actuaries study “The 2011 Risks and Process of Retirement Survey” reveals growing concern of risks among retirees but little change in their retirement planning. The retirement risks that most concern both retirees and pre-retirees are:
• Keeping the value of their savings and investments up with inflation (69 percent of retirees, 77 percent of pre-retirees)
• Having enough money to pay for adequate health care (61 percent of retirees, 74 percent of pre-retirees)
• Having enough money to pay for long-term care (60 percent of retirees, 66 percent of pre-retirees)
• Being able to maintain a reasonable standard of living for the rest of their life (59 percent of retirees, 64 percent of pre-retirees)
• Varying income as a result of changes in interest rates (57 percent of retirees, 64 percent of pre-retirees)
• Depleting their savings (54 percent of retirees, 63 percent of pre-retirees)
These results should be lessons learned for young employees that they should start saving for retirement early and not divert retirement assets for other purposes. They must plan for the last 1/3 of their life either with a financial planner or by using robust retirement planning software. For those too lazy to do this work, a benchmark is to plan to accumulate about 12 times the salary that is expected at age 65. Saving this much will help them maintain their standard of living and eliminate the retirement risks described above.