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Survey Shows Most Americans “Clueless” About Retirement Finances

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If you were to ask most Americans how important it is to have a solid understanding of retirement finances, the majority would agree that it’s extremely important, even essential. Saving money (and spending it wisely) is one of the keys to enjoying retirement with enough resources to live the way we want to live. But if that’s so, then why are so many Americans so ignorant concerning the basic elements of retirement finance?

That’s the lingering question from this article that appeared last year on the popular (and somewhat irreverent) financial website Motley Fool. The title of the piece says it all: “Most Americans Don’t Know Jack About Retirement. Do you?” We reported on this article when it was first published but sadly there hasn’t been much improvement in financial knowledge since then – and when it comes to retirement, ignorance can be very, very costly.

Major Knowledge Gaps

In early 2017 the financial firm Fidelity conducted their first-ever Retirement IQ Survey (here’s a link if you want to check it out) designed to gauge how well-informed the public is about saving for, investing for and spending in retirement. Fidelity says their survey uncovered “significant knowledge gaps” and that at least three-quarters of respondents seriously underestimated how much they will need to save. And as Motley Fool put it, “If you don’t understand these fundamental aspects of pre- and post-retirement finance, how can you possibly come up with a retirement plan that works?”

Before we describe a bit more about Fidelity’s survey, this seems like a good time to remind you that, as vital as a good financial plan is in retirement, it’s not enough. A truly comprehensive plan that will preserve your assets and allow you to live the way you want as you age, without burdening those you love, demands much more. Merely planning on how to save and spend your money will not get you where you want to go, any more than a stool with one leg can ever hold you up for long. Here at AgingOptions, we have the solution, called a LifePlan, which we’ll talk about in a moment.

Four General Categories of Financial Savvy

The Fidelity Retirement IQ Survey included more than 2,000 respondents. Half were in the age group between 55 and 65 and not yet retired. The others were broadly representative of the 18-plus population. Fidelity asked respondents eight different questions, which the Motley Fool article summarized in four general categories of financial savvy. Understanding these, the article suggests, should allow you to enjoy “a financially stress-free retirement.” While that seems like an overstatement to us, here are the “critical topics” about which so many American adults seem to be in the dark:

  • The historical returns of the stock market: After the recession of 2007-2009 and the resulting investment losses suffered by many, a large number of people withdrew all their assets from stocks in favor of safer investments. Many still shy away from stocks for fear of repeating those losses. But in fact the stock market has enjoyed positive returns in 31 of the past 36 years, and the average return has hovered around 7 percent. Only one survey respondent in twelve correctly and accurately assessed the power of the stock market to build an asset base for retirement.
  • The average length of retirement: Respondents in the Fidelity study were asked how long they would need to have their retirement savings last if retirement began at 65. A large number of those surveyed said retirement would last 12-17 years. But the fact is, those turning 65 today will live an average of 22 more years and some will go on far longer. Says Motley Fool, “If you underestimate how long your retirement is likely to last, as many survey respondents did, you’re setting yourself up for financial disaster.”
  • The amount you can safely withdraw from retirement accounts: While there’s no hard and fast rule, many financial advisers suggest that a retiree in his or her 60’s can safely withdraw about 3 ½ percent annually from 401(k) and IRAs, with that percentage rising as the retiree gets older.  But many in the Fidelity survey guessed far higher, estimating that they could safely withdraw 10 percent of the money, or even more, starting early in retirement. Taking out more than a cautionary minimum early on, warns the Motley Fool article, could deplete your savings too rapidly and leave you without assets later.
  • The cost of healthcare: According to Fidelity, the average couple retiring last year at age 65 would need to plan on spending about $260,000 for the remainder of their lived on healthcare. But the majority, almost three-quarters, underestimated that figure by a large margin – some by a whopping $200,000! That shows a dismaying ignorance of the facts and is an ominous sign that millions are careening toward retirement with a dangerous lack of fundamental knowledge about what lies ahead.

The Need for Comprehensive Planning

But thanks to the professionals at AgingOptions, you don’t have to be one of those lost in a fog of retirement finances ignorance. With your AgingOptions LifePlan as your guide, you’ll be able to chart a course for the retirement you’ve dreamed of, confident that you’re prepared for just about everything aging can throw your way. A LifePlan from AgingOptions is like a building built with five interconnected pillars: your financial plan, your legal plan, a plan for your housing choices, a plan for your medical coverage, and even a plan to involve your family so they’ll fully support your intentions and wishes. There’s nothing like an AgingOptions LifePlan when it comes to ensuring retirement peace of mind.

It’s easy to find out more: plan now to invest a few hours and join Rajiv Nagaich at a free LifePlanning Seminar. We offer these highly popular events all throughout the region. For currently scheduled seminars, this link will give you all the details – then you can register online or contact us for assistance.

When it comes to retirement, ignorance is definitely not bliss – it’s disastrous. But with AgingOptions you can approach retirement finances informed and prepared. Age on!

(originally reported at

Photo Source: Senior Solutions Management Group,


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