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Retirement Risk Survey 2024: Key Findings

The Society of Actuaries (SOA) Research Institute has unveiled important insights from its biennial Retirement Risk Survey, aimed at shedding light on the financial challenges people face as they approach retirement. The survey represents a diverse group of 2,012 participants aged between 45 and 80, with a mix of retirees and pre-retirees from various income levels throughout the United States.

Shift in Perspective on Financial Security

A notable trend observed in this year’s survey is a decline in the percentage of retirees who feel they are financially better off than expected. This decline indicates a growing urgency within this demographic to address their financial strategies. Only 20% of retirees reported experiencing significant financial shocks, which resulted in asset losses exceeding 25%.

Meanwhile, 35% of pre-retirees also reported experiencing similar shocks, indicating that increased financial awareness is not translating into stronger financial outcomes. Many in this group are adjusting their savings plans due to rising living costs, especially amid decreasing savings opportunities.

Major Concerns: Inflation and Financial Stability

Inflation topped the list of concerns affecting both pre-retirees and retirees. Approximately 78% of pre-retirees fear their savings will fail to keep pace with inflation, and 58% of retirees shared this anxiety. The overall pressure from rising costs is pushing many individuals to reassess their retirement plans, particularly those earning less than $100,000 annually.

The Role of Caregiving

Caregiving responsibilities have emerged as another significant factor complicating financial preparedness for retirement. Approximately 13% of pre-retirees are actively providing care to family members other than their own children, while 6% of male retirees and 9% of female retirees are in similar situations. The emotional and physical toll of caregiving is cited as a crucial concern, impacting their ability to adequately plan for retirement.

Respondents indicated that caregivers often report heightened stress from financial obligations, with many highlighting the lack of readiness for potential medical emergencies within their families.

Technology’s Impact on Financial Planning

The survey also examined the role of technology in retirement planning. While 62% of respondents expressed frequent use of online banking tools, trust in the security of these technologies remains low. This skepticism is quite relevant, especially as fraudulent schemes targeting retirees become increasingly common. The need for greater education around secure financial technologies appears pressing, as many respondents identify a knowledge gap that could hinder effective planning.

The Future of Retirement Planning

As the SOA continues its research, the full report is set to be published in early 2025, providing more granular insights. In the meantime, SOA emphasizes the importance of improved financial literacy and strategic planning to help mitigate these concerns.

Anna Rappaport, the past SOA President and the Chair of the SOA Committee on Post-Retirement Needs and Risks, cautioned that many respondents might be overestimating their financial preparedness given the ongoing economic changes. “The financial landscape is changing rapidly, and what worked in the past may no longer be sufficient,” she stated.

In summary, this year's Retirement Risk Survey highlights pressing issues faced by current and future retirees, stressing that proactive measures must be taken to navigate the complexities of retirement planning in an evolving economic climate.