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Most Retirees Feel Confident and Optimistic; Many Are Overspending and Few Have a Game Plan Study Found That More Than A Quarter Spend 10 Percent or More of Savings Annually CHARLOTTE, NC—Despite facing "golden years" that could last two decades or longer, more than a quarter – 28 percent – of retirees surveyed in Wachovia's fourth annual Retirement Survey report withdrawing 10 percent or more of their retirement savings annually to pay for expenses. People who report this withdrawal rate have an average of $375,000 in savings. Only 38 percent say they withdraw "5 percent or less" of their savings. About half – 47 percent – say they have a written withdrawal strategy, and only 28 percent report having a written budget for spending their savings. "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 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
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:
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 |
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