4% of current retirees say they are “living the dream”, according to a survey

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Only 4% of today’s retirees say they are “living the dream,” according to a new survey from asset management company Schroders.

And as many – 4% – said they were “living a nightmare”.

Most respondents fall somewhere in between: 44% say they are comfortable; 34% said they are not great, but not bad; and 15% reported difficulty, according to rounded results.

“The real retirement picture is far from the dreams Americans had hoped for and worked so hard for,” said Deb Boyden, head of U.S. defined contribution at Schroders.

The survey, carried out in March and April, covered 2,000 adults, including nearly 500 retirees. The findings come as inflation is still higher than usual and rising prices have made it harder for retirees to make their money last.

The biggest concern, cited by 89% of respondents, is inflation decreasing the value of their assets.

Next came higher-than-expected health care costs, at 85%; a major market downturn that could significantly reduce their assets, 76%; not knowing how to make the most of their income, 69%; and surviving their assets, 68%.

Is a pension crisis brewing?

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The Schroders survey results come as more experts point to a potential pension crisis.

“The retirement savings crisis in the United States is no longer looming: it is here, now,” says a new report from the National Institute on Retirement Security.

Americans could face a deficit in their golden years as many workers still don’t have access to employer retirement savings plans and typical retirement savings aren’t up to par of workers’ standard of living before retirement, according to the study.

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One factor to blame is the decline in the provision of defined benefit pension plans in the private sector, according to the NIRS, which has shifted responsibility for retirement savings from employers to workers.

Today’s retirees are more likely to use their own or their spouse’s retirement plan for income rather than their own savings account at work, according to the Schroders survey.

It is less likely that future retirees will be able to count on pension income, as fewer of them have a pension now than today’s retirees, and it is more likely that they will be financially vulnerable if they do not. They don’t have enough savings, Boyden said.

Not everyone agrees on the existence of an emergency

Some experts doubt there is a retirement savings crisis.

“You have this narrative of how the retirement system is changing, and yet all the best data actually tells you the opposite,” said Andrew Biggs, a senior fellow at the American Enterprise Institute who has worked on retirement reform. Social Security under President George W. Bush.

For many Americans, much of the confusion around retirement comes down to how much to save.

Americans think they need an average of $1.46 million to retire comfortably, according to a recent study from Northwestern Mutual.

Similarly, a third of workers who calculated the amount of money they’ll need in retirement estimated $1.5 million or more, the Employee Benefit Research Institute recently found.. Yet a third of workers have less than $50,000 in savings and investments, and 14% of workers have less than $1,000, according to EBRI.

A typical Gen X household has only $40,000 in retirement savings in private accounts

Biggs sought to debunk the idea that retirees must have massive amounts of money saved up, using data from a Federal Reserve survey as evidence.

In the Fed survey, among seniors with $50,000 to $99,999 in savings, 86% said they were living comfortably or doing well. Among seniors with more than $10,000 in retirement savings, 93% said they were doing well or living comfortably.

“If we’re going to have a pension crisis, why don’t we already have one?” Biggs said in an interview.

What people can do to cope with uncertainty

New projections released this week confirmed that the Social Security and Medicare trust funds are still on the brink of insolvency.

Over the next decade, lawmakers from both sides will need to come together to find a solution to avoid a loss of benefits.

The existence of a pension crisis could be the subject of a heated debate between Democrats, who want to make benefits more generous, and Republicans, who want to limit the size of programs to reduce public spending.

Less than half of respondents in the Schroders survey (44%) said they had saved enough for retirement; 32% said they had not saved enough; and 24% are unsure.

Experts say there are several ways to try to address these uncertainties.

By delaying Social Security benefits beyond the initial claiming age of 62, they can access higher benefits. If there were future benefit reductions, this would be reflected in a higher benefit amount.

This also saves more, although higher costs make this more difficult.

Compound interest – interest accrued on interest – can help even small amounts grow significantly over time.


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