Crisis Looms as Survey Reveals Americans Not Prepared for Retirement

A recent survey conducted by the Alliance for Lifetime Income (ALI) has shed light on the alarming state of retirement preparedness among Americans close to retirement or recently retired. The findings of the “Americans Change Retirement Savings Strategies” survey indicate a concerning lack of financial readiness, as more than half of the retiring generation no longer has a pension to rely on during their golden years.

According to Jason Fichtner, a senior fellow and head of the Retirement Income Institute and chief economist at the Bipartisan Policy Center in Washington, D.C., a seismic shift has occurred in retirement security. In the past, many individuals could count on a pension to support them during retirement. However, this is no longer the case for the majority of Americans today. Instead, they must solely rely on their own savings efforts to prepare for life after work.

Fichtner stressed that this shift poses a significant challenge, leaving many Americans at risk of outliving their savings during retirement, leading to what experts are now calling a “retirement crisis.”

One critical factor contributing to this crisis is the looming “Peak 65” moment, anticipated to happen next year. This historical demographic event will see the largest number of Americans reaching the age of 65 at any given time. As a result, roughly 10,000 people a day are currently turning 65, and this number is set to increase to 12,000 daily once the Peak 65 moment is reached.

To address the growing concerns surrounding retirement preparedness, the Alliance for Lifetime Income conducted the multipart 2023 Protected Retirement Income and Planning (PRIP) study, the only research of its kind to survey both consumers and advisers simultaneously. The study aims to understand the changing landscape of retirement income planning, including shifts in consumer attitudes and behaviors toward retirement savings.

Notable highlights from the survey include the following findings:

1. 51% of consumers aged between 45 and 75 feel they lack sufficient retirement savings to last their lifetime.
2. 32% lack confidence in having enough money in retirement to cover basic monthly expenses.
3. 44% of retired individuals or those who have retired previously have returned to work due to financial constraints.

Interestingly, the survey reveals that consumers desire to invest 80% of their retirement savings in safer investment options, seeking protection and stability for their future. Those with a pension and/or an annuity demonstrate a significantly more positive outlook on their retirement prospects.

Notably, consumer demand for annuities has surged to an all-time high, driven by concerns over market volatility and declining retirement investments. Many individuals are turning to annuities as a way to safeguard their financial future and ensure a steady stream of income during retirement.

As the retirement crisis intensifies, experts and policymakers are urged to address the growing concerns surrounding the financial preparedness of older Americans. The findings from the ALI survey serve as a wake-up call, emphasizing the need for comprehensive retirement planning and adequate support to ensure a secure and comfortable retirement for all Americans.