1 in 5 Americans don’t plan on retiring
by Claude Solnik
September 19, 2013
Roughly one out of five Americans don’t expect they’ll ever be able to afford to completely retire, according to a new study by HSBC that paints a bleak picture of many Americans’ retirement hopes.
The survey by HSBC found that 18 percent of working-age Americans expect to have to work indefinitely – rather than retiring. That’s far more than the 12 percent average, according to the international study.
This “Life after Work” report is based on a survey of more than 16,000 people in 15 countries and territories between July 2012 and April 2013.
“While some people still regard a comfortable retirement as a natural entitlement, for a large number of Americans this is no longer the case,” Andrew Ireland, regional head of wealth management for HSBC North America, said in a written statement.
The study found that about one-third of divorced or separated Americans, far greater than the overall population, doesn’t believe they will ever be able to afford to retire.
Forty-four percent of those in the U.S. who already retired said they hadn’t prepared adequately or at all for a comfortable retirement, compared to 38 percent around the world.
Around one in eight or 12 percent of Americans who didn’t prepare adequately said they believed they would be forced to go back to work to cover their expenses.
“The sad truth is this: America is facing a retirement crisis that threatens to collapse the entire financial system if it is not addressed soon,” said Salvatore J. Armao, managing partner at accounting firm Armao in Garden City.
“Millions of baby boomers are preparing to retire in the next 10 to 15 years,” Armao added. “In the past, $1 million was considered to be the target goal for the amount of money needed to retire comfortably. Today’s advisers are saying that amount isn’t enough as the result of longer life spans and the uncertain future of Social Security.”
Jonathan S. Kuttin, a financial adviser at Kuttin-Metis Wealth Management, a private advisory practice of Ameriprise Financial Services in Melville, said Americans are searching for ways to prepare to retire.
“Even after spending decades saving and prudently investing for retirement, many people are asking themselves if they can afford to retire and how to make their income last over time,” Kuttin said.
HSBC found that 64 percent of those who entered “semi-retirement” wished that they had worked full-time longer.
The bank recommended that retirees not rely on a single source of income and plan to be ready for expenses for frail elderly parents and to provide some financial help for adult children.
“Life is full of reasons to prioritize short term spending over longer term planning,” Ireland said. “But the sooner people start saving, the less likely they are to have to rely on working in retirement.”
Difficulties in retiring could lead to a national crisis, if this retirement gap between what people have and what they need continues to grow.
“Unless this crisis is addressed, we are going to have a significant increase in homelessness and people looking for support from the government,” Armao said.