Dreams may clash with realities when it comes to retirement plans

When you talk to Americans about retirement, a dichotomy emerges between perception and reality. Emotionally, the picture they paint of their retirement sounds like a Hollywood script: happy, fulfilled, traveling on nice vacations. But the truth of their financial picture may not measure up. In fact, many report concerns about everyday expenses and admit they haven't taken actions to prepare — including saving enough.

This contradiction is revealed in the new Ameriprise Financial Retirement Check-In® survey results. “People are saying one thing but doing another when it comes to preparing financially for retirement,” said Suzanna de Baca, vice president of Wealth Strategies at Ameriprise.

The survey also validates how taking actions, and having a written plan in place, is essentially what separates people who feel confident and prepared for retirement from those who don’t.

What the survey revealed about contrasting retirement views
The dramatic disconnect between dreams and expectations is evidenced by these key findings:
 
Confidence in being able to afford essentials in retirement is shaky. Fewer than half are extremely (19%) or very (27%) confident on this goal.       Yet, eight in ten (78%) expect to be extremely happy in retirement and feel they will be emotionally ready to retire (83%).

 

Even fewer are extremely (14%) or very (24%) confident that they will be able afford the extra things (like travel) they have been looking forward to in retirement.       Yet for many (72%), their dream retirement includes taking really nice vacations.

 

Finally, three in five (62%) say they have done everything they can to prepare for retirement.       Yet:
  • Two-thirds (68%) expect to work for pay after they officially retire.
  • Three-fifths (58%) say they could save more for retirement if they wanted to.
  • One-third (32%) say they are afraid they are not saving enough for their future needs.

 

What’s causing this gap? Two main things: First, the steps people are taking to plan and save for retirement are falling short of what they believe will create their own happiness. Second, there’s still a significant gap between what they think they will need financially to retire versus what they have actually saved. In fact, one out of three Americans surveyed (32%) say they are afraid they are not saving enough for their future needs.

How you can apply these insights to help improve your own situation

Can you relate to the findings in our survey? Most people know what they should do, but they haven’t yet taken steps to make it happen. “Thankfully, the actions needed to close these gaps are simple,” says de Baca. Start by discussing these five opportunities with your advisor:

  1. Maximizing contributions to your workplace retirement plan.
  2. Setting up automatic deposits to build a cash reserve that will cover expenses for at least six months.
  3. Estimating what you expect your annual expenses to be in retirement.
  4. Calculating expected income from all sources — Social Security, retirement plans, IRAs and other accounts.
  5. Purchasing the right insurance to take care of unexpected events that can derail a happy retirement — including disability income coverage if you are working, and long-term care insurance in advance of retirement.

Your Ameriprise financial advisor is ready to help you build a plan that closes the gaps between where you are now and where you most want to be when you retire. So perception and reality can meet in your future.

The Retirement Check-In® survey was commissioned by Ameriprise Financial, Inc. and conducted by telephone by Koski Research in November 2012. Respondents included 1,000 employed Americans age 50-70 with $100,000 or more in retirement funds and/or investable assets.

Investment advisory products and services are made available through Ameriprise Financial Services, Inc., a registered investment adviser.

Ameriprise Financial Services, Inc. Member FINRA and SIPC.