These and other data from the Alliance survey, which was conducted in May 2019, spotlighted the causes of a retirement income shortfall confronting millions of Americans. According to the U.S. Census Bureau, the U.S. is five years away from having the most 65-year-olds in its history, when in 2024 a record 4,518,758 Americans will reach this important milestone.

“At the same time that two-thirds of Americans are telling us that they’re optimistic about retirement or the next phase in life, only 42 percent of non-retired Americans believe their savings and sources of income will last their lifetime,” said Jean Statler, executive director of the Alliance.

Forty-five percent of non-retired Americans indicated that they were extremely or moderately anxious their savings might not provide enough to live on in retirement. Conversely, 71 percent of retired Americans said that they believed their savings and income would last their lifetime – evidence in part that many of today’s retirees were among the last to benefit from a pension, according to the Alliance. Today, only 17 percent of private sector workers have access to a pension, one of the three ways to get protected lifetime income.

Those who expressed either severe or moderate anxiety about the adequacy of their income during retirement attributed their concern to several factors, beginning with healthcare. Seventy-five percent cited the rising cost of healthcare, while 65 percent said that they worried about an unforeseen healthcare need arising.

The balance of their concerns were financially related, including not having enough lifetime income (77 percent), not having a source of lifetime income (73 percent), the risk of a financial surprise (71 percent), not having a good retirement income plan (69 percent) and, finally, not having enough assets (68 percent).

“The data underscore the inherent uncertainty of retirement. That’s why the guaranteed income required to manage unforeseen financial needs is a greater concern to non-retired Americans than not having enough financial assets,” said Ms. Statler.

According to the Alliance survey, among non-retired Americans, only 18 percent said that they had “very seriously” envisioned life in retirement, while 37 percent said that they had “somewhat seriously” contemplated the topic. The balance of non-retirees (45 percent) said that they had “not very seriously” or “not at all seriously” envisioned life in retirement or simply “don’t know.” What’s more, when asked about the extent of planning they already had done, eight in 10 (80 percent) indicated that they lacked a specific financial plan that they followed.

Further evidence of the retirement planning deficit, according to the Alliance, was that only 28 percent of non-retired Americans said that they had made an effort to determine their likely monthly income needs in retirement, which was perhaps the single most important question when considering retirement income needs. Even among those closest to retirement – Americans between 55 and 74 years of age – only 43 percent said that they had made such a calculation.

No less strikingly, the Alliance added, one in five non-retired Americans said that they were unable to indicate any next step in planning for retirement, underlining the uncertainty that many Americans have about how to prepare.

When asked about the “most recent actions” related to retirement they had taken in the past year, no single activity stood out. Non-retired Americans focused relatively evenly on three broad sets of activities: thinking about the “what” and “when” of retirement; working on the “how” (financially); or seeking insight either directly or through an advisor. Younger Americans were slightly more focused on the “how,” whereas those closest to retirement were somewhat more focused on the “what” and “when,” while demonstrating a greater propensity to seek the perspective of professional advisors.

“Planning for retirement is overwhelming for most Americans – which is why all too many shy away from running the numbers – preferring to guess at what they’ll need instead,” said Jean Chatzky, educational fellow with the Alliance and founder and chief executive of HerMoney. “The key is to start with the tangibles: the type of house you think you’ll live in (and whether it will be paid off), the car you’ll drive, how often you go out to eat, what you’ll need for healthcare above Medicare. Add it up and figure out how much Social Security will or won’t cover. Those are the first steps to figuring out how much retirement income you’ll need to provide for yourself.”

Six in 10 non-retired Americans (61 percent) cited financial constraints – either lack of money, debt, or the need to save for major expenses (car, home, or education) – as one of their top three barriers to taking more actions to prepare for retirement. Four in 10 (44 percent) mentioned the uncertainties – too many unknown factors or that it was too far away. One third (35 percent) said that they were not making the time to plan and prepare for retirement because they either were focused on every day demands or felt that they did not have enough time. One in seven (14 percent) said that they did not know what to do to plan for retirement, while one in six (16 percent) said that they were preparing for retirement.

In addition, most non-retired Americans indicated that they relied on family and friends when making important decisions related to their finances (68 percent), emotional needs (91 percent), or health related (80 percent) questions. Just 60 percent said that they had access to professionals to offer expertise about finances, though only half that number (26 percent) indicated that they actually worked with a licensed financial professional.

“Although most of us feel comfortable relying on a medical professional for health advice, fewer rely on a financial professional for retirement advice,” noted Michael Finke, professor and Frank M. Engel Chair of Economic Security at The American College of Financial Services. “This likely supports the other finding that retirees feel they can adapt if they live too long or markets don’t perform as expected. I would rather retirees get the guidance from retirement planning experts who can help them manage their nest egg and determine how much they can safely spend so they don’t have to worry about whether their savings will run out.”

According to the survey, most people have taken at least some steps to prepare for retirement, although two out of 10 (21 percent) said that they could not think of a thing they had done. Moreover, when asked what next step non-retirees planned to take to prepare for their retirement, their responses ran the gamut: three in 10 said that they planned to save more; one in four said that they planned to seek advice or develop a plan; two in 10 said that they planned to approximate the “when,” “what,” and “where,” surrounding their retirement; and two of 10 said that they did not know what their next step would be.

The non-retired Americans who said that they had talked a lot about retirement with their spouse or family, which represented 24 percent of the respondents in the Alliance survey, said that they were more comfortable with both their retirement plans and their financial preparedness than the other three-quarters of Americans. They were characterized by the following:

• 58 percent said that they believed their income would last their lifetime;
• 91 percent said that they believed they could successfully plan for retirement;
• 83 percent said that they were very or somewhat optimistic about retirement;
• 34 percent said that they had a specific financial plan; and
• 49 percent said that they had calculated how much money they would need each month to cover expenses in retirement.

“What we see in the data is that retirement planning, including taking the steps required to assure income security, is a virtuous circle. It begins with optimism for retirement, which leads to talking with others about retirement, thinking seriously about retirement and, ultimately, adhering to a strong financial plan,” said Ms. Statler.

She continued, “Contrary to long-held beliefs, the path to retirement security isn’t linear but rather circular in a way that can create a positive feedback loop for individuals over time. Perhaps the easiest action people can take, and what the research has shown to be an excellent gateway to income security in retirement, is starting a conversation about your retirement income plan with someone you trust.”

Learn more: www.AllianceForLifetimeIncome.org.