Because retirement isn’t a life event you can repeat — and one that seems far away for many people — planning for it can be a challenging task. Doing so has become all the more difficult, due to financial challenges arising from the coronavirus pandemic.
Consequently, a new survey from senior living resource Caring Advisor found that only 14% of Americans age 50 and older would be able to retire tomorrow if necessary, with another 20% responding they could do so after making some lifestyle changes.
However, 44% of respondents — including 60% of people in their 50s, 27% in their 60s and 6% in their 70s — said they would not be able to retire tomorrow with their current savings.
Majority of Americans over 50 struggle to save for retirement
Recent findings from global asset management company Schroders revealed that 62% of Americans plan on working during their retirement for reasons that included staying busy, enjoying work and covering their basic expenses.
Caring Advisor's survey supports these results, as it found that 66% of its respondents are still working. This included:
- 77% of people in their 50s
- 54% of people in their 60s
- 27% of people in their 70s
Across all three age groups, over 55% said that they’re still working because they need the income. However, compared to those in their 50s (34%), those in their 60s (43%) and 70s (44%) were more likely to stay employed because they enjoyed their work.
One of the biggest factors that may be contributing to this situation is the debt that some older Americans still carry. The Caring Advisor survey showed that respondents still held a variety of debts, with the most common ones across age groups being:
- Credit card debt (51%)
- Mortgage (42%)
- Car loan (28%)
- Personal student loans (14%)
Meanwhile, 19% of respondents didn't have any of the specified debts at all. Americans in their 50s were more likely to have debt compared to those in their 60s or 70s, but many 70-somethings said they were still paying off a credit card (51%) or mortgage (41%).
Retirement prospects impacted by a lack of planning and savings
Caring Advisor also asked respondents about the financial missteps they may have taken on the road to retirement, both in their youth as well as later in life. According to the survey participants, the biggest mistakes they made in their 20s and 30s included:
- Not saving enough money (65%)
- Not having a financial plan (49%)
- Living paycheck to paycheck (43%)
- Not following a budget (35%)
- Opening multiple credit cards (33%)
Even though these may simply seem like mistakes many young people make, survey results indicate that a lack of savings or a financial plan can very well undermine your plans for retirement.
Take, for example, the most common mistakes respondents made starting in their 50s:
- Not saving enough to retire (36%)
- Planning for retirement too late (32%)
- Not having emergency savings (30%)
- Not having an investment plan (21%)
- Failing to plan for future health care and long-term care costs (19%)
Although these miscalculations happened when they got older, creating a financial plan and saving money early on could have helped to mitigate some of these challenges, especially in light of the current health crisis.
Among the financial mistakes made in their golden years, 17% of respondents reported prematurely withdrawing money from their retirement plan accounts. This may foreshadow an issue many Americans will have years from now, as a different survey from Kiplinger found that 58% of consumers have already borrowed from their retirement funds due to the COVID-19 pandemic.
As a result, 52% of Americans over 50 believe that their current financial situation won't change after the pandemic is over. Another 40% look forward to an improvement in their finances, while only 9% expect a turn for the worse.
Methodology: Caring Advisor gathered data from 1,003 American consumers over the age of 50 through the Amazon Mechanical Turk and Prolific platforms. The average age of respondents was 60, with 56% of respondents identifying as male and 44% identifying as female.