Affluent Americans may not be as ready for retirement as they believe, according a new survey from Charles Schwab & Co.
The survey finds that while most affluent Americans have a retirement plan in place (84%) and feel confident about their retirement readiness (80%), they may be underestimating how much money they will need once they retire. Survey respondents estimate they will need on average about $66,000 in annual income, significantly less than their current average income of $115,000.
“In many cases, we tell clients to assume they’ll need roughly the same annual income in retirement as they had beforehand unless they anticipate a significant lifestyle change, and to take into account longevity risk when planning how much money they might need,” says Carrie Schwab-Pomerantz, senior vice president of Charles Schwab.
Almost four in 10 affluent Americans (39%) say they do not plan to work at all in retirement and 46% say they might work part-time even though they expect to have enough money to live without working. One in 10 believed they will have to work at least part-time to make ends meet, according to the survey.
For roughly half of the respondents (52%), confidence in their retirement readiness was unchanged from last year. Almost as many feel more optimistic (23%) as they did less optimistic (24%) about their retirement readiness than a year ago.
Respondents did express some financial worries. More than half (53%) say their primary concern is incurring unexpected expenses in retirement, such as medical or health care costs.
The study polled 1,811 investors between the ages of 25 and 80 with a minimum of $250,000 in investable assets and retirement funds.
Margarida Correia is Associate Editor of Bank Investment Consultant, a SourceMedia publication.
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