WASHINGTON, May 21, 2024
/PRNewswire/ -- As the youngest and final group of Baby
Boomers begin reaching the traditional retirement age of 65, new
research conducted by the Alliance for Lifetime Income (ALI) shows
stunning changes to the retirement landscape. The study reveals
that half of Americans ages 61 to 65 have already retired and
started claiming Social Security payments. Additionally, 28% are
still providing financial support to adult-age children and
extended family members.
This survey confirms how emotionally
uncertain and financially unprepared consumers are as they enter
retirement.
The 2024 Protected Retirement Income and Planning (PRIP) annual
study, now in its sixth year, examines the attitudes and behaviors
toward retirement savings of Americans ages 61 to 65, known as Peak
65 consumers. PRIP is the only research of its kind that
simultaneously surveys both consumers and financial advisors. The
first chapter of the report released today highlights critical
insights on the state of retirement today.
Disparate Assets and Emotions About Retirement
The
study uncovers a wide disparity in investable household assets
among Peak 65 consumers, influencing their outlook on retirement.
While 51% have investable household assets of less than
$100,000, 25% have assets between
$100,000 and $500,000, 13% have assets between $500,000 and $1
million, and 11% of Peak 65 consumers have assets of
$1 million or more.
It also reveals a seesaw of emotions when it comes to how Peak
65 consumers feel about retirement and money. While 34% are worried
about their financial situation, an almost equal number (33%) are
confident. And while 39% are uncertain about their financial
situation, 42% are optimistic.
"This year's PRIP survey confirms how emotionally uncertain and
financially unprepared Peak 65 consumers are as they enter
retirement," said Jean Statler, CEO
of the Alliance for Lifetime Income. "More than half of Peak 65
consumers have saved $100,000 or
less. It's almost certain they will run out of savings and have to
rely on Social Security as their only income."
"The problem is people don't realize that Social Security is
designed to cover only about 40% of your pre-retirement income on
average, leaving a huge gap. The good news is millions of Peak 65
consumers still have the opportunity of protecting themselves from
outliving their savings with an annuity. It's why educating
consumers on how to have a secure retirement is so vitally
important and something we've dedicated ourselves to doing here at
the Alliance," said Statler.
Retiring Early
Half (51%) of Peak 65 consumers are
already retired. Those who stopped working did so at an average age
of 57.7. Those who are still working plan to retire at an average
age of 67.1. A 2020 ALI survey of Americans aged 61 to 65
identified health concerns or dissatisfaction with their employer
as the main reason 25% of retirees stopped working. An additional
22% were either forced or incentivized to retire. "The data
consistently demonstrates Americans often retire earlier than they
anticipated due to unforeseen circumstances," said Statler, "It's
more important than ever that people expect the unexpected when
planning for retirement."
Claiming Social Security Payments Early
Nearly half
(49%) of Peak 65 consumers are already receiving Social Security
payments. 66% of them have investable household assets of less than
$100,000. Among Peak 65 consumers who
are now drawing Social Security payments:
- 43% are doing so because of a disability or the inability to
work;
- 40% need the income;
- 30% expressed "fear of missing out", citing concerns that
Social Security won't be there in the future, their payment would
be cut, or that they may die before reaching full retirement
age.
"There is real concern that Social Security will not be able to
support people who are relying on it as their primary source of
retirement income, which is why Congress needs to act now," said
Jason Fichtner, Executive Director
of the Alliance's Retirement Income Institute and former Chief
Economist at the Social Security Administration. "With pensions
virtually gone, middle class Americans in particular are looking
for protection and financial certainty in retirement and should be
considering annuities to create their own personal pension to fill
the gaps left by Social Security."
Financially Supporting Adult Relatives
The 'sandwich'
generation is growing. Nearly 4 in 10 (38%) of Peak 65 consumers
have one or more living parents or in-laws, which underscores the
challenge of planning for a long retirement.
Additionally, 28% are currently providing financial assistance
to adult relatives, including children aged 18 or older,
grandchildren, parents, in-laws and other family members. Of these,
18% of Peak 65 consumers say this financial support cuts into their
retirement savings and income.
Challenges in Retirement
Nearly half (48%) of Peak 65
consumers do not think their retirement savings and sources of
income will last their lifetime, and nearly a third (31%) worry
their retirement income won't cover their essential monthly
expenses throughout their lifetime.
"While it's a difficult financial picture for more than half of
Peak 65 consumers, there is still an opportunity for millions more
to be financially secure in retirement if they protect themselves
with an annuity," said Statler. "Federal Reserve data shows that
the median income for an annuity owner in 2022 was about
$76,000, and so we know that middle
Americans are using annuities to create personal pensions to
protect themselves."
Corresponding Findings from a Definitive
Study
This first chapter of the 2024 PRIP
study aligns with the findings from a definitive study
commissioned by the Alliance's Retirement Income Institute.
Authored by Robert J. Shapiro, a former
Under Secretary of Commerce for Economic Affairs, the study
examining the economic impact of Peak 65 consumers found a majority
of Americans who will turn age 65 between 2024 and 2030 are not
financially prepared for retirement.
Released in April 2024, the study
finds that two-thirds of these Baby Boomers will struggle to
maintain their lifestyles in retirement based on their assets and
their likelihood of living up to 20 or more years in
retirement.
About the Survey
This online survey of consumers was
conducted by Artemis Strategy Group from February 15 to March 2, 2024. The 2,516 consumers
are ages 45 to 75, of which 505 are an oversample of Peak 65
consumers ages 61 to 65, for a total of 886 Peak 65 consumers.
Data is weighted to align with the population on age, income by
gender, race/Hispanic ethnicity, region, work and retirement
status, assets, and education.
About the Alliance for Lifetime Income
The Alliance
for Lifetime Income (ALI) is a non-profit 501(c)(6) consumer
education organization based in Washington, D.C., that creates
awareness and educates Americans about the value and importance of
having protected income in retirement. Our vision is for a country
where no American has to face the prospect of running out of money
in retirement. The Alliance provides consumers and financial
professionals with unique educational resources and interactive
tools to use in building retirement income strategies and plans. We
believe annuities – one of only three sources of protected lifetime
income – can be an important part of the solution for retirement
security in America. The Alliance's Retirement Income Institute
houses the leading retirement scholars and experts who create
evidence-based research and analysis, with practical ideas and
actions to help protect retirees. For more information about the
Alliance, visit www.protectedincome.org.
About Cannex
CANNEX Financial Exchanges Ltd. supports
the exchange of pricing and data for annuities and bank products,
including term deposits and guaranteed interest contracts (GICs).
The firm's data gives financial institutions the ability to
evaluate and compare various guarantees associated with savings and
retirement products. For more information about CANNEX,
visit www.cannex.com.
Contact: Suzy Wagner
(703) 899-3427
Suzy@alincome.org
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SOURCE Alliance for Lifetime Income