A quarter of middle class Americans say they will “need to work until at least age 80” to live comfortably in retirement, according to a new Wells Fargo Retirement survey. While just over a third (35 percent) say they will work because they want to, 39 percent say they will have to put off retirement to make ends meet or maintain their lifestyles.
Retirement security is one of the biggest personal concerns in households with a net worth between $100,000 and $1 million (not including primary residence), according to a 2011 wealth level study conducted by Millionaire Corner. Nearly two-thirds (63 percent) are concerned about having enough money set aside for retirement, while 56 percent fear not being able to retire as planned. These concerns are felt most keenly by those ages 54 and younger (71 percent and 66 percent, respectively).
Retirement concerns are compelling younger households to consider working with a financial advisor, our research shows. More than 40 percent said they wanted more advice in managing their employee-sponsored 401(k) retirement plans.
There is a growing dichotomy between retirement expectations and economic realities. Many Americans have seen their savings devastated by the prolonged economic downturn, high unemployment, stock market volatility, and the collapse of the housing market.
More than half (54 percent) of Middle class Americans ages 40 to 59 years-old say they will “need to work,” compared to 34 percent of those ages 25 to 39, the Wells Fargo survey found. Only a quarter of those between 40 to 49 say they will work during retirement because they “want to.”
Not surprisingly, older respondents are less willing than their younger counterparts to accept future cuts to Social Security and Medicare to help solve the country’s debt crisis. Only 28 percent of those ages 50 to 59 and 19 percent of those ages 60 to 75 would be willing to accept cuts, compared to 49 percent of those between 25 and 49. This may be because younger people aren’t counting on Social Security. More than quarter of people in their 20s (26 percent) and 30s (28 percent) do not expect to receive any income from Social Security during their retirement years.
In contrast, the Wells Fargo survey found, those in their 50s expect Social Security to provide 36 percent of their retirement funding, while those in their 60s expect it to cover 46 percent.
More than half (53 percent) of respondents say they “need to significantly cut back on spending today to save for retirement.” Americans have saved, on average, only 7 percent of their desired retirement next egg—a median of $25,000 in retirement savings against a median retirement goal of $350,000. About three in ten people in their 60s have saved less than $25,000 for retirement.
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.