New Survey: Many Americans Still Plan to Rely on Social Security for Retirement Income, Gap between Retirement Targets and Source of Income Continues

Here's a press release I was sent the other day regarding a new survey on Social Security:

CINCINNATI, OH, November 7, 2006 – Despite the common knowledge that social security and company provided pensions may not be available for Americans when they approach retirement, many still plan to rely on them as significant sources of income when they retire.  According to a new survey by the Retirement Corporation of America, nearly one in four Americans indicate they will look to social security (23 percent) for their primary source of income during their retirement years. 

The survey also highlights a distinct gap between what Americans think they need to have saved by the time they retire and where they expect to derive their income during their retirement years.  While nearly six in ten (59 percent) believe that they are likely to reach their savings goal, only three in ten (31%) believe that their savings, mutual funds or IRAs will be the primary source of their income. Sixty-one percent of non-retired Americans believe that they will need to have saved $500,000 or more when they retire.

"It is not surprising that many Americans believe they will have enough money to retire," said Daniel Kiley, chairman and chief compliance officer of the Retirement Corporation of America.  "Increased life expectancy has driven many to work for a longer period of time, offering a greater chance of achieving financial retirement targets.  However, as traditional sources of retirement income such as company pensions and Social Security dwindle by each passing day, more Americans will have to take charge of their finances and begin planning and investing to generate alternate streams of income.”

Survey respondents were split in their views about retirement age. While one in four Americans does not plan to retire at all, another quarter plan to retire between the age of 51-60 and 36 percent plan to retire between 61 and 69. 

Further, most Americans indicate that they are actively planning for retirement, as 70 percent indicate that they are regularly saving or investing some of their income and 38 percent say the amount they are saving or investing will be enough for their retirement. 

About the Survey -- The survey is based on a national phone poll of 1,000 non-retired Americans conducted September 29-October 1, 2006 and was compiled by Rasmussen Reports, LLC, an independent research firm. The margin of sampling error for a survey based on this number of interviews is approximately +/-3 percent with a 95 percent level of confidence.
---------------------------------------------------------

Is it just me or do people seem to be in denial about retirement savings?

Comments

[beloml]

A 49-year-old co-worked bragged recently that she was in great shape for retirement--$60,000 in the bank.

[Duane Gran]

I would more likely stake my claim on the existence of aliens among us than I would count on social security for retirement.

[Duane Gran]

(not that I believe aliens are among us or anything like that.... just sayin')

[jay]

There is always the lottery I guess. I'm glad I'm having this beaten into my head now, still a little later than ideal, instead of 15 years from now.

[Rhea]

It takes a lot for some of us to stop and realize that the government isn't going to provide for us like it perhaps did for the earlier generation.

[Lord]

Even if nothing is done to Social Security you will still be able to collect 2/3s of projected benefits. Forever (or at least while you are living). That is not a small amount. It is certainly larger than most peoples savings. I would be more worried if I worked for government since those promises may or may not be backed just as it is for most defined benefit plans.

[Bill Woessner]

"Even if nothing is done to Social Security you will still be able to collect 2/3s of projected benefits. Forever (or at least while you are living). That is not a small amount."

You're kidding, right? The average retiree will collect $9,948 in "benefits" in 2006. That's below the poverty line. That's pathetic. That's downright criminal when you consider how much better off our retirees would be if they had been able to invest their FICA dollars.

What's worse is that we now pay far more of our hard-earned dollars to FICA than today's retirees ever did. And you're telling me that I should be grateful that I'll be getting 2/3 of the benefit?

When are people going to wake up and realize that Social Security is the biggest rip-off ever perpetrated against the American people? The middle class, in particular, has been screwed coming and going. They've seen their FICA rates go up and their "benefits" go down. Every single worker would be far better off if they could take their FICA dollars and invest them, privately.

[Flexo]

Social Security isn't a retirement plan, it's wealth redistribution. If people stop looking at Social Security as something that's supposed to benefit the persons who pay into the program (it's not), they may be more inclined to start thinking about their own future.

[Bill Woessner]

Flexo, you claim that Social Security isn't supposed to benefit the people who pay in to it. If that's true, then whom is it supposed to benefit? You don't qualify for Social Security unless you pay in to the system. In addition, your "benefit" is computed based on how much you paid in to the system.

[Lord]

It is a benefit indexed for inflation, something not even most private plans offer, and you will be collecting that benefit for longer than ever before. I agree 2/3s of a small benefit is small, but that 2/3s will still be more than the benefits paid today due to wage indexation of contributions. It is too small, too small to cut further. One needs a diversified portfolio of income and Social Security can be a very valuable part of that. The return isn't great, only about the return on bonds, but it isn't nearly as heavily taxed. In addition to retirement benefits it also offers disability and survivorship benefits. Try buying anything equivalent in the private market and you would soon find out what a bargain it is. If Social Security is all you planning on then it would be pathetic, but complementing it with private investments can produce a very solid plan. And $10,000 capitalized at 5% amounts to $200,000. Do you have anywhere near that much saved?

[Flexo]

Bill W.: in a retirement plan, the amount you invest earns interest or otherwise appreciates over time. It's your money. Social Security is completely different. The money you put in isn't yours, and you're not expected to get your principal plus interest or appreciation that's due on the amount you paid.

This site explains where your money goes, and it's not necessarily to the future you.

http://tinyurl.com/yedxmm