"When you retire, you have to make your savings last until the end of your life, and the way to do this is to create a proactive plan for the money you've earned," said Lynne Ford, director of Wachovia's Retail Retirement Group. "You can't spend as large a chunk of your savings annually as we're seeing in this data."
Richard Day Research (RDR) of Evanston, Ill., conducted 2,100 online interviews for Wachovia with respondents between the ages of 55 and 70 and with household assets of $75,000 or more, excluding the value of real estate holdings.
The study also found that the majority of respondents report taking Social Security at age 62. Another 17 percent report taking Social Security benefits at age 65. Only nine percent report delaying Social Security benefits past age 65.
When asked to identify their "greatest concerns" in retirement, respondents cited deteriorating health, unexpected illness and the rising cost of healthcare as the top three.
Optimism Prevails in Retirement
In spite of little planning, 84 percent of the retirees surveyed characterize themselves as "not distressed" in relation to managing their finances in retirement. Among younger retirees—those between the ages of 55 and 59 with less than $250,000 in assets—75 percent describe themselves as "not distressed."
Professor Thomas Gilovich, chairperson of the Psychology Department at Cornell University reviewed the study and said, "Many things conspire to make recent retirees content with their financial prospects for their ‘golden years.' There is a general human tendency to discount the future and focus on the here and now, especially if the future may involve physical decline or isolation. As people age, they become very good at looking on the bright side and derive satisfaction with what comes one's way. Unfortunately, the early retirement years often are a time for unwarranted and potentially deleterious optimism."
Gilovich is the author of the book Why Smart People Make Big Money Mistakes. He reviewed the results of the study but is neither a sponsor of the study nor is affiliated with Wachovia.
The potential to outspend retirement savings does not appear to worry respondents, as 91 percent say they feel "confident" or "very confident" that they have enough savings to last in retirement. A slight majority, 52 percent, say life in retirement is "better than expected" and 37 percent say it is about "as expected."
When respondents were asked whether "saving for retirement or managing retirement savings" was more difficult, 61 percent said saving for retirement and 39 percent said managing their retirement savings.
Anxiety Appears to Lessen Significantly in Retirement
The study compared the "emotional barriers" reported by those in retirement and those in pre-retirement and found significant differences.
Emotion Feel hopeful (often)
Feel confident (often)
Feel worried
Worry about investing mistakes
Frightened to entrust savings in stock market
Feel "very confident" will have enough money | Non-retired 31 percent
29 percent
50 percent
43 percent
46 percent
16 percent | Retired 48 percent
55 percent
31 percent
28 percent
42 percent
40 percent |
To help people understand how to prepare for and live in retirement, Wachovia has developed an age-based approach to guide them through retirement's different stages. Visit the Wachovia Retirement Center online at www.wachovia.com/personal/page/0,,6938,00.html
For those close to or in retirement, Wachovia has developed key assessment tools to help them think about what they need:
- Retirement Readiness Assessment http://retirementstrategy.mworld.com/retirement/readiness/assessment.asp
- Retirement income needs estimator http://retirementstrategy.mworld.com/retirement/estimatingneeds/calculator.asp
- Retirement Spending Plan Worksheet
http://www.wachovia.com/personal/page/0,,6938,00.html
Consumers can also call Wachovia's Retirement Resource Center at (866) 588-9606 Monday through Friday from 8:00am to 8:00pm Eastern time.
Full copies of the study can be obtained through Wachovia by calling Amy Jones at (704) 383-4995.
About Wachovia Corporation
Wachovia Corporation (NYSE:WB) is one of the nation's largest diversified financial services companies, with assets of $782.9 billion and market capitalization of $75.3 billion at December 31, 2007. Wachovia provides a broad range of retail banking and brokerage, asset and wealth management, and corporate and investment banking products and services to customers through 3,400 retail financial centers in 21 states from Connecticut to Florida and west to Texas and California, and nationwide retail brokerage, mortgage lending and auto finance businesses. Globally, clients are served in selected corporate and institutional sectors and through more than 40 international offices. Our retail brokerage operations under the Wachovia Securities brand name manage more than $1.2 trillion in client assets through 14,600 registered representatives in 1,500 offices nationwide. Online banking is available at wachovia.com; online brokerage products and services at wachoviasec.com; and investment products and services at evergreeninvestments.com.
