Data and Research May 18, 2017

Short-Term Financial Considerations Prioritized Over Retirement Savings

Despite Americans’ concerns about being able to afford retirement, more than half of those surveyed (51%) do not include retirement in their long-term financial goals.
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Americans report they are worried about affording retirement, but over half say they aren’t saving money to retire.

The latest COUNTRY Financial Security Index revealed that two in three Americans (67%) report the country’s current events are making them concerned about their financial future. Given this backdrop, it may not come as a surprise the survey also found nearly one-third (32%) worry they either will not be able to retire or will need to delay retirement in the future.                 

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Despite their concerns, more than half of those surveyed (51%) do not include retirement in their long-term financial goals.

The lack of retirement savings could in part be due to prioritizing short-term financial considerations. Americans report they are more concerned about affording unexpected expenses (44%), health care costs (41%) and taking desired vacations (36%) than they are about having adequate retirement savings (32%).

“Many Americans are outliving their assets because they did not include retirement in their long-term financial goals,” says Doyle Williams, an executive vice president at COUNTRY Financial. “We strongly encourage people to develop a long-term plan so they can eliminate the fear of never being able to retire.  By taking some simple steps almost everyone can have a plan in place to secure their financial future.”

With advancements in health care, it is not uncommon for people to spend more years in retirement than previous generations. For planning purposes, COUNTRY Financial suggests a good rule of thumb is to assume living to about age 90 unless health or family history indicate otherwise. Moreover, the desired standard of living during retirement will influence how much money a person will need. The company advises that people plan to have at least 75% of their pre-retirement income to pay for living expenses during retirement.
Data and Research May 18, 2017

Whites Have More Sources of Retirement Income

On average, white adults ages 50 and older have three sources of income for retirement, compared with two sources each for older African Americans and Hispanics, a survey found.
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In addition to racial and ethnic differences in family wealth, African Americans and Hispanics have less financial security than whites and will rely on fewer sources of income during retirement, according to a survey by The Associated Press-NORC Center for Public Affairs Research.

Overall, older white Americans are nearly twice as likely as African Americans to say they have a sufficient nest egg for retirement. Thirty-eight percent of whites ages 50 and older report that they’ve saved enough for retirement, compared with 20% of African Americans.

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On average, white adults ages 50 and older have three sources of income for retirement, compared with two sources each for older African Americans and Hispanics. White adults are also less likely to have no sources of retirement income at all; just 4% of whites report having no retirement income sources compared with 14% of both Hispanic and African American adults.

In addition to disparities by race and ethnicity in the number of sources of retirement income available to older adults, the types and sources of this income vary. 

Whites are more likely than African Americans and Hispanics to have Social Security (82% vs. 62% and 60%, respectively), a retirement account like a 401k or IRA (61% vs. 38% and 35%), an inheritance (13% vs. 3% and 5%), other investments (21% vs. 6% and 8%), or other savings (40% vs. 17% and 19%) as retirement funds. On the other hand, older African Americans are more likely than older whites to say they have disability payments as a source of retirement income (27% vs. 12%).

The full survey report is here.

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