While more than a third of baby boomers said they expect Social Security to be a major source of income in retirement, their primary concern about being able to retire comfortably is a 10% or higher rise in health care costs. About half of the respondents cited this—followed by substantial cuts in Social Security benefits and a U.S. recession—as possible retirement barriers in a recent survey by MFS Investment Management
In the case of financial shortfall in retirement, baby boomers are more likely to have adjusted their lifestyle (63%) than to have saved more for emergencies (44%), with the most popular solutions being a cut in spending, working part-time during retirement and pushing delaying retirement age.
“The survey findings point out a big disconnect between what investors say they plan to live on in retirement, and what they actually can count on for that income,” says William Finnegan, senior managing director and head of Global Retail Marketing for MFS.
The online survey, administered from Aug. 29 to Sept. 10, drew from 923 individual U.S. investors with $100,000 or more in household investable (non-retirement) assets and 603 licensed U.S. financial advisers who have been licensed for at least three years with $500,000 or more in annual mutual fund sales. 301 of the participants were baby boomers, between the ages of 48 and 66.
“While pursuing a healthy lifestyle is laudable, it is far from a risk-free strategy in terms of the health of your retirement,” Finnegan says.
Teck Lim writes for Financial Planning, a SourceMedia publication.
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