Many Still Not Taking Steps Needed to Prepare for Retirement

By Ted Godbout • June 15, 2017 • 0 Comments
Many are still not taking all of the steps they need to prepare for retirement and are relying on uncertainties like receiving an inheritance in planning their retirement income funding, according to a recent survey by Natixis Global Asset Management.

The nationwide survey found that 78% of investors believe that funding retirement is increasingly their responsibility, yet nearly half (43%) are pinning their hopes on receiving an inheritance as part of their funding plan.

Clearly the generational expectations do not appear to align. The survey found that 62% of Millennials, compared to 31% of Baby Boomers, expect to receive an inheritance to help fund their retirement. However, 40% of Boomers do not plan to leave an inheritance, and of those, 57% do not think they will have anything left to pass down. In fact, Americans were the least likely among the 22 countries and regions surveyed to say they expected to leave an inheritance, Natixis noted.

As to understanding some of the nuances of retirement planning, nearly 3 in 10 (28%) Boomers do not fully understand the Required Minimum Distribution (RMD) requirements, the survey found. Moreover, 25% of Boomers who have a financial advisor say their advisor has never discussed RMDs with them, and nearly 4 in 10 (39%) have not looked into ways to manage the tax impact.

Interestingly, Millennials supposedly have taken a more proactive approach to planning for retirement than older generations have. According to the survey, 59% of Millennials already have established a financial plan to help reach their retirement savings goals, surpassing the 56% of Baby Boomers who have done the same. In addition, 78% of Millennials say they are getting professional advice compared to only 55% of Baby Boomers. Yet, nearly two-thirds (64%) of Baby Boomers agree that they need financial advice even in retirement.

The survey further shows that the cost of long-term care and out-of-pocket health care expenses are considered the biggest threats to financial security in retirement by both Baby Boomers and Millennials. In addition, Natixis found that nearly 30% of retirees still do not know how much income they need annually to live on, let alone meet other goals.

Conducted in February 2017, the survey featured 750 individual investors across the United States with a minimum of $100,000 in investable assets, and is part of a larger global study of 8,300 investors in 22 countries and regions from Asia, Europe, the Americas and the Middle East.

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