Study Found That More Than a Quarter Spend 10 Percent or More of Savings
Annually
CHARLOTTE, N.C., April 2, 2008 /PRNewswire-FirstCall/ -- Despite facing
"golden years" that could last two decades or longer, more than a quarter -
28 percent - of retirees surveyed in Wachovia's fourth annual Retirement
Survey report withdrawing 10 percent or more of their retirement savings
annually to pay for expenses. People who report this withdrawal rate have
an average of $375,000 in savings. Only 38 percent say they withdraw "5
percent or less" of their savings. About half - 47 percent - say they have
a written withdrawal strategy, and only 28 percent report having a written
budget for spending their savings.
"When you retire, you have to make your savings last until the end of
your life, and the way to do this is to create a proactive plan for the
money you've earned," said Lynne Ford, director of Wachovia's Retail
Retirement Group. "You can't spend as large a chunk of your savings
annually as we're seeing in this data."
Richard Day Research (RDR) of Evanston, Ill., conducted 2,100 online
interviews for Wachovia with respondents between the ages of 55 and 70 and
with household assets of $75,000 or more, excluding the value of real
estate holdings.
The study also found that the majority of respondents report taking
Social Security at age 62. Another 17 percent report taking Social Security
benefits at age 65. Only nine percent report delaying Social Security
benefits past age 65.
When asked to identify their "greatest concerns" in retirement,
respondents cited deteriorating health, unexpected illness and the rising
cost of healthcare as the top three.
Optimism Prevails in Retirement
In spite of little planning, 84 percent of the retirees surveyed
characterize themselves as "not distressed" in relation to managing their
finances in retirement. Among younger retirees -- those between the ages of
55 and 59 with less than $250,000 in assets -- 75 percent describe
themselves as "not distressed."
Professor Thomas Gilovich, chairperson of the Psychology Department at
Cornell University reviewed the study and said, "Many things conspire to
make recent retirees content with their financial prospects for their
'golden years.' There is a general human tendency to discount the future
and focus on the here and now, especially if the future may involve
physical decline or isolation. As people age, they become very good at
looking on the bright side and derive satisfaction with what comes one's
way. Unfortunately, the early retirement years often are a time for
unwarranted and potentially deleterious optimism."
Gilovich is the author of the book Why Smart People Make Big Money
Mistakes. He reviewed the results of the study but is neither a sponsor of
the study nor is affiliated with Wachovia.
The potential to outspend retirement savings does not appear to worry
respondents, as 91 percent say they feel "confident" or "very confident"
that they have enough savings to last in retirement. A slight majority, 52
percent, say life in retirement is "better than expected" and 37 percent
say it is about "as expected."
When respondents were asked whether "saving for retirement or managing
retirement savings" was more difficult, 61 percent said saving for
retirement and 39 percent said managing their retirement savings.
Anxiety Appears to Lessen Significantly in Retirement
The study compared the "emotional barriers" reported by those in
retirement and those in pre-retirement and found significant differences.
Emotion Non-Retired Retired
-- Feel hopeful (often) 31 percent 48 percent
-- Feel confident (often) 29 percent 55 percent
-- Feel worried 50 percent 31 percent
-- Worry about investing
mistakes 43 percent 28 percent
-- Frightened to entrust
savings in stock market 46 percent 42 percent
-- Feel "very confident"
will have enough money 16 percent 40 percent
To help people understand how to prepare for and live in retirement,
Wachovia has developed an age-based approach to guide them through
retirement's different stages. Visit the Wachovia Retirement Center online
at http://www.wachovia.com/personal/page/0,,6938,00.html
For those close to or in retirement, Wachovia has developed key
assessment tools to help them think about what they need.
Retirement Readiness Assessment
http://retirementstrategy.mworld.com/retirement/readiness/assessment.asp
Retirement income needs estimator
http://retirementstrategy.mworld.com/retirement/estimatingneeds/calculator.asp
Retirement Spending Plan Worksheet
http://www.wachovia.com/personal/page/0,,6938,00.html.
Consumers can also call Wachovia's Retirement Resource Center at
866-588- 9606 Monday through Friday from 8:00 a.m. to 8:00 p.m. Eastern
time.
Full copies of the study can be obtained through Wachovia by calling
Amy Jones at 704-383-4995.
Wachovia Corporation (NYSE: WB) is one of the nation's largest
diversified financial services companies, with assets of $782.9 billion and
market capitalization of $75.3 billion at December 31, 2007. Wachovia
provides a broad range of retail banking and brokerage, asset and wealth
management, and corporate and investment banking products and services to
customers through 3,400 retail financial centers in 21 states from
Connecticut to Florida and west to Texas and California, and nationwide
retail brokerage, mortgage lending and auto finance businesses. Globally,
clients are served in selected corporate and institutional sectors and
through more than 40 international offices. Our retail brokerage operations
under the Wachovia Securities brand name manage more than $1.2 trillion in
client assets through 14,600 registered representatives in 1,500 offices
nationwide. Online banking is available at wachovia.com; online brokerage
products and services at wachoviasec.com; and investment products and
services at evergreeninvestments.com.
SOURCE Wachovia
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Related links:
http://www.wachovia.com
CONTACT:
Amy Hyland Jones, Wachovia, +1-704-383-4995
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