What is our biggest fear when it comes to retirement?
Millennials are the most worried. Twenty-nine percent cited running out of money as their biggest concern. But Gen X’ers were not far behind, at 28 percent. Nineteen percent of Baby Boomers have the concern and 21 percent of people 71 and older are worried, according to the survey.
The next two biggest concerns: Covering health care expenses (19 percent) and maintaining their current lifestyles (23 percent). Not surprisingly, the age group most worried about health care expenses was baby boomers (24 percent), while the concerns about maintaining current lifestyle seemed to cross all generations: millennials, 20 percent; Gen X, 23 percent; boomers and people 71 and older, both 25 percent.
For Poolman the biggest surprise was in the answers to questions on how much people have saved for retirement.
“When you look at the top three fears, they all have to do with not saving enough for retirement,” he says. “That’s not a surprise. When you dive down into that, one in four baby boomers has less than $5,000 saved for retirement. “That’s shocking to me. It tells me we need to keep having a national conversation about retirement, about saving and about planning.
“The average couple that retired last year will need $240,000 to cover future medical expenses in retirement,” he says. “Showing people those kinds of facts can only educate them about the need to start saving now.”
Poolman says it is never too late to start saving for retirement. “Even though you may have not saved and you are way behind, don’t make yourself further behind,” he says. “People should not give up. Those who think they cannot afford to save can start looking at a budget and find ways to cut costs. Just saving a little bit now can help a lot later.”
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Question of the week
What is your biggest fear about retirement? Send comments to rodney.brooks@washpost.com. Please include your name, city and state. In the subject line put “Retirement Fears.”
Last week’s question: Would you change the age you started taking Social Security benefits if you could?
Sandra Stone of Florence, Ala., wrote:
I am 64.5, retired for 2 years, single with no dependents. I have a pension that does not adjust for inflation and a 401(k). I just filed for Social Security which my state does not tax as they do 401(k) withdrawals. I am concerned about pension health and want to assure I have disposable funds later in retirement.
Chuck Wiley of Belgium:
I read your article with interest, as I just reached 62.5 years in age and also started collecting Social Security retirement benefits in June.
Before I applied, I received information from the Social Security Administration regarding my projected monthly benefits for three ‘starting-point’ ages — 62.5, 65 and 70. Obviously, waiting for the later ages would result in higher respective monthly benefit amounts, but I did some analysis by building a simple spreadsheet to get a more complete picture of my options.
This analysis showed that if I waited till I was 65, rather than 62.5, I would forego nearly $270,000 in accumulated benefits between the ages of 62.5 and 73, when the benefits that would result from waiting to collect the monthly amount accorded to one who starts at age 65 equal the accumulated benefits accrued from starting at age 62.5. In other words, it would take me 10 years to receive the same (accumulated/aggregate) amount accruing from a (higher) monthly benefit starting at age 65 than would be the case by starting to accrue a (lower) monthly benefit at age 62.5.
If I would wait to age 70 to start collecting the (highest possible) monthly benefit, instead of starting at age 62.5, I would forego over $440,000 in accumulated benefits until I reach 80+, when the two accumulated/aggregate amounts are equal. In other words, it would take me 17 years to accumulate the same aggregate amount of Social Security benefits resulting from an age 70 start date, rather than from one resulting from starting at age 62.5 at a lower monthly benefit rate.
Everyone’s situation is different, but I would suggest than anyone facing the question that you have posed go through a similar process. If you can’t build a simple spreadsheet, do some back-of-the-envelope calculations to see what the impact for your specific situation. Seeing how much I would lose by waiting to collect higher monthly benefits at age 65 or 70, rather than 62.5 (both in $ amounts and years) really helped make the decision to start at age 62.5 an easy one. Great for me, although I am not sure this is true for the future of Social Security, unless some changes are made to buttress its financial underpinnings.
Barbara Herman:
I started collecting SS when I turned 65. I worked until I was 76, so I really didn’t need the money and put it all away. I thought I was required to take it at 65, and found out years later that I could have waited until I was 70. If I had known, I would have waited, and I would collect 50 percent more each month. I have told my sons to wait until they’re 70. I wish someone had told me.
Norman St. Amour:
I would have preferred waiting until 70 before collecting Social Security, because my monthly direct deposit would have increased about 8 percent per year. That was my initial goal. However, health issues and a job that was very demanding of my time and energy made me change that; I had visions of dropping dead just as I was ready to collect.
My secondary goal was to keep working, but beginning to collect it at age 66 and use it to pare down debt. Hopefully two years would have turned the trick, four years at most. Such a strategy only works if your work is not too physically demanding. A greedy employer whose position was take it or leave it made it totally out of the question. I’m sure many others have had to deal with similar experiences.
I made the right decision for my circumstances, but I would have preferred waiting four more years.
My most recent retirement columns:
Thinking of buying your dream home in retirement? Do this first.
The make or break factor in retirement: keeping a budget
A quarter of recent retirees would delay Social Security if they had a do-over
After you have saved for retirement, annuities can help put your nest egg to work
Michelle Singletary’s latest columns:
How to catch the lowest refinancing rates
When teaching kids about budgets, adults can learn just as much
Write Brooks at The Washington Post, 1301 K St. NW, Washington, D.C., 20071, or rodney.brooks@washpost.com. On Twitter @Perfiguy. Personal responses may not be possible, and comments or questions may be used in a future column, with the writer’s name, unless otherwise requested. To read more, go to washingtonpost.com/business