A number of different factors are putting stress on the finances of retired and pre-retiree Americans. According to a new report from the Society of Actuaries Research Institute, retirees are less likely to report being “better off than expected” in 2024 than in 2021. The study also shows that pre-retirees are more conscious of unplanned financial events than before.
The most recent biennial Retirement Risk Survey, which surveyed 2,012 Americans aged 45-80, points to a number of factors changing retiree and pre retiree expectations and savings plans.
Inflation seems to be a major concern for both the retired and pre-retired. According to the study, 78% of pre-retiree respondents expressed concern over inflation’s effect on their retirement income. Fifty-eight percent of retirees reported concern over the same issue. These numbers make sense when you look at how inflation has impacted common expenses. Fifty-one percent of pre-retirees and 35% of retirees reported rising costs of food and daily expenses. Forty-five percent of pre-retirees and 29% of retirees reported rising utility bills. Finally, 44% of pre-retirees and 27% of retirees said lifestyle costs had gone up.
Beyond rising prices, a significant number of pre-retirees and retirees have taken major financial hits. Specifically, 20% of retirees and 35% of pre-retirees reported financial shocks that resulted in a loss of more than 25% of their assets.
Family and caregiving issues might also affect the finances of pre-retirees and retirees. Thirteen percent of pre-retiree respondents reported giving care of having given care to family members who are not their own minor children (parents, adult offspring, grandchildren, extended family).
hat’s more, less than 10% of both retirees and pre-retirees said they provide significant financial support to family members. Thirty-eight percent of pre-retirees and 27% of retirees felt unprepared to handle a family member’s medical emergency or health issue.
Anna Rappaport, FSA, MAAA, past SOA President and current Chair of the SOA Committee on Post-Retirement Needs and Risks, expressed worry over the challenges related to family and caregiving, saying, “I’m concerned respondents might be overestimating their level of preparedness. The costs and caregiving obligations connected to a medical emergency or health issue can be very high. Even though inflation rates have come down, many are still affected by high prices for housing and groceries.”