It’s not exactly news that Americans are nervous about their retirement prospects – but a new study finds that a couple of key demographic groups are especially anxious.
The 2018 Protected Lifetime Income Index study, “The Clock is Ticking: Generation X and the challenge of retirement readiness,” published by a group called “The Alliance for Lifetime Income,” first draws a distinction based on age. Roughly two-thirds (65%) of those younger than 55 are concerned retirement income will last their lifetime, compared with (just?) 45% of those older than that. The study’s authors attribute this marker to access to a pension plan, noting that (based on their data) over half (51%) of those older than 55 access this type of funding, compared with less than a third (32%) of those aged 45-54 and a quarter of those (25%) under 45.
The second line of demarcation is assets, and here the study’s authors draws the line at those who have at least $75,000 in assets (in addition to a home) and those who don’t have that much. Why $75,000? The report notes that, “Someone having success in preparing financially for retirement most often needs to start accumulating assets. While not a huge sum, $75,000 is a marker of progress against that goal.”
Perhaps more significantly, the report notes that retirement outlook is strongly associated with this financial division; among those with less than $75,000 in assets, three-quarters (77%) don’t expect their retirement savings and income to last their lifetime, compared to only one-third (32%) of those with at least $75,000 in assets. Moreover, this “low-asset group” anticipates being heavily dependent on Social Security for retirement income, expecting it to account for a median of 62% of their income, while the higher-asset group expects Social Security to be just a quarter of their income on average, with the rest filled in by savings, pensions, annuities and other financial resources.
Higher-asset households have substantially higher incomes on average; only 2 in 10 (18%) higher asset households have current incomes less than $75,000, and only 3% have incomes less than $35,000. By contrast, 7 in 10 (69%) low-asset households have incomes under $75,000 annually and nearly a third (31%) have incomes less than $35,000.
Consider, too, that only 26% of those with incomes under $75,000 have been able to accumulate $75,000 or more in assets, and only 10% of those with less than $35,000 in income have done so.
Additionally, half of high asset households (50%) hold a pension compared to just one in five (20%) of those with low assets.
Of course, you can’t have a report about retirement readiness without a cautionary note about even those who seem to be relatively well-situated. The report notes that even when this “high asset” group is asked about current financial priorities, two of five (40%) indicate that their top financial goal is either getting out of debt or keeping up with expenses, and while most think their retirement income will last their lifetime, one third (32%) do not, and a similar proportion (34%) acknowledge moderate to high anxiety about whether their savings can provide enough to live on in retirement.
Oh – and let’s not forget that while a majority of the higher-asset group has a source of protected lifetime income – either a pension or an annuity – nearly half (47%) do not…
The 2018 Protected Lifetime Income Index study was conducted on behalf of The Alliance for Lifetime Income by Artemis Strategy Group, a Washington-based communications research firm, from Sept. 11-19, 2018, among a national sample of 3,120 participants ages 25 to 74. The interviews were conducted online, and the survey was balanced against the Census to assure an appropriate age, gender, income, education, race, Hispanic ethnicity and regional distribution.
The Alliance for Lifetime Income describes itself as a “nonprofit 501(c)(6) organization formed and supported by some of the nation's leading financial services organizations to create awareness and educate Americans about the importance of protected lifetime income” – and they are “the sole official sponsor of the Rolling Stones’ 2019 “No Filter” U.S. stadium tour – now rescheduled following Mick Jagger’s heart surgery.