Retirement income, unexpected financial ‘shocks’ top list of concerns among retirees

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Retirees are less likely than in previous years to say they are “better off than expected” in 2024, with retirement income and unexpected financial hits topping their list of concerns, according to the results of a new survey.

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The Society of Actuaries Research Institute on Tuesday released the initial findings from its biennial Retirement Risk Survey. The researchers polled 2,000 individuals aged 45 to 80 years to gain insights into financial retirement risks.

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According to the poll results, respondents do not feel better off this year compared with those who participated in the 2021 survey. Pre-retirees said they are increasingly aware of the need to financially prepare for unexpected events compared with pre-retiree respondents in previous surveys, yet the amount they are saving has decreased, potentially affecting their ability to pay for long-term care.

“In response to rapid societal change and a population that is still re-adjusting after several years of the COVID pandemic, this year’s survey explored several new areas of emphasis,” Anna Fappaport, past SOA president and chair of the SOA committee on post-retirement needs and risks, said in a statement. “These include the impact of familial caregiving support on retirement planning, effects of inflation, and the role of AI and other emerging technologies.”

The survey revealed growing concerns about maintaining financial security in retirement. Having savings and investments that are not keeping up with inflation was a top issue cited, with 78% of pre-retirees and 58% of retirees expressing that concern. In addition, 20% of retirees and 35% of pre-retirees said they had experienced a “financial shock” that resulted in a loss of more than 25% of their assets. One in five pre-retirees have run out of assets, had to downsize due to finances or were fraud victims.

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The John A. Hartford Foundation, Age Wave and The Harris Poll recently released a separate report identifying access and affordability of long-term care as top concerns for older adults. The senior living industry repeatedly has pointed to research showing the value proposition of senior living, through its cost effectiveness, quality of life, improved outcomes and resident satisfaction. A Genworth Cost of Care survey showed “nothing comes close” to assisted living in providing cost effectiveness — assisted living reportedly saves Medicaid $43 billion annually and Medicare $15 billion annually.

Underprepared for retirement

For those taking the Society of Actuaries Research Institute survey, caregiving responsibilities also elicited worries. Thirteen percent of pre-retirees said they either provide care or have provided care to a parent or loved one, with a significant number of those respondents reporting that those responsibilities are taking an emotional and/or physical toll on them. In addition, 14% of male retirees who said they are caregivers said that caregiving responsibilities are affecting their own long-term care planning.

“I’m concerned respondents might be overestimating their level of preparedness,” Rappaport said. “The costs and caregiving obligations connected to a medical emergency or health issue can be very high. Even though inflation rates have come down, many are still affected by high prices for housing and groceries.”

According to survey results, inflation is affecting everything from food and daily expenses to lifestyle (44% of pre-retirees and 27% of retirees), leading more pre-retirees to adjust savings strategies, particularly for individuals with annual incomes below $100,000.

The full Retirement Risk Survey report will be published in 2025.

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