Projected funding shortfalls for Social Security and Medicare heighten concerns that investors are not saving enough money for retirement.
Annual reports released last week reveal the two agencies will run out of money sooner than expected. Social Security funds will be exhausted in 2036, one year sooner than projected last year. Medicare funds will be depleted in 2024, five years earlier than previously forecast. Regulators attribute the worsening financial situation to the sluggish economy.
Once reserves are gone, the agencies would begin paying benefits at a reduced rate with Social Security paying 23 percent less to the elderly and disabled, and Medicare paying 10 percent less to hospitals and other institutions providing inpatient care. About 54 million Americans now receive Social Security benefits, which totaled $702 billion in 2010.
Retirement savings tops the list of financial concerns shared by investors, even those who are relatively wealthy, reports Spectrem Group in a recently released study. The Chicago-area market research firm specializes in affluent investors and defines wealth in terms of net worth, excluding primary residence.
Sixty-three percent of investors with a net worth of $100,000 to $1 million say they are worried about having enough money set aside for retirement. More than 55 percent also worry about being able to retire when they want to.
Fewer than half feel they have a well-defined strategy for investing and only 45 percent are satisfied with the performance of their retirement plan over the past year.
Concern is even higher among affluent investors aged 54 and younger. More than 70 percent of the younger investors worry about having enough money in their retirement years, and one-third say they will have to delay retirement because of the current economic environment.