Ameriprise Financial Survey Shows Americans Experience Disconnect Between Emotions, Retirement Goals and Financial Reality

Tue Feb 5, 2013 7:00am EST

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On average, those nearing retirement aim to close a $250,000 gap before they can
retire comfortably; 68 percent plan to work after they officially retire
MINNEAPOLIS--(Business Wire)--
The majority of Americans (78%) nearing retirement expect to be extremely happy
after they leave the workforce - and why not? They are looking forward to
spending unrestricted time with family, traveling, and pursuing personal hobbies
and goals. But it appears many may be financially ill-prepared to participate in
these activities as much as they`d like to, according to the Retirement
Check-In® survey released today by Ameriprise Financial (NYSE: AMP). 

Only 46% of Americans ages 50-70 say they are extremely or very confident
they`ll be able to afford essential expenses like housing, utilities and medical
costs in retirement. Even fewer (38%) say the same about their confidence in
affording extras like traveling and pursuing hobbies. There is also a
significant group (38%) of Americans who may not have an accurate understanding
of what those costs will be since they admit they haven`t yet estimated their
annual expenses for retirement. Adding to these worrisome numbers is the fact
that many aren`t taking basic financial steps that experts recommend to feel
financially confident in retirement. 

"There seems to be a significant disconnect between the expectations that
Americans have for their lifestyle in retirement, and the financial steps
they`re taking - or not taking - to make those expectations a reality," said
Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial.
"The good news is there are several things that most people are doing right, and
there are steps that everyone can take to help build their financial readiness
for retirement." 

Retirement Mindset and Preparedness - A Worrisome Disconnect
On the surface, it appears that Americans nearing retirement are feeling pretty
good about leaving the workforce. Seven in ten (70%) say they feel in control of
their financial future, and the overwhelming majority (88%) say they feel
comfortable navigating all of the resources available about retirement
preparation. Three-quarters of Americans (72%) even say that their dream
retirement includes really nice vacations. 

However, since more than half (53%) of survey participants say they`re only
moderately confident or not confident about their ability to afford the
essentials in retirement, it seems that some respondents may be experiencing a
sense of complacency when it comes to financial preparation for this milestone.
Fewer than two-thirds (62%) assert that they`ve done everything they can to
prepare, while nearly three out of five (58%) say they could save more than what
they`re putting away now. 

The apparent disconnect is also emphasized when respondents are asked if they
feel afraid that they aren`t saving enough - only one in three (32%) agree.
While it`s encouraging that most Americans feel unafraid and in control of their
finances, the number of those who say they feel unsure about whether they can
afford what they need and want in retirement is troubling. 

Exposing the Gap: What Americans Think They Need vs. What They`ve Actually Saved
Adding to the contradictions between emotional assurance and actual financial
preparedness is that Americans really haven`t saved as much as they think they
will need - despite the fact that so many believe they could save more or take
extra steps to prepare. The data uncovers that these Americans between the ages
of 50-70 believe they need to add approximately $250,000 to their nest egg to
retire comfortably. 

On average, respondents say they think they will need close to $1 million for a
comfortable retirement ($934,000), but their current investable assets are just
under $700,000, including their employer-sponsored plans. Perhaps even more
concerning is that one in four respondents (22%) report they have less than
$250,000 total saved for retirement. 

But Americans are thinking about how they might make up the difference. Nearly
half (47%) expect to use their home equity to help fund their retirement - a
surprising statistic considering that housing values remain well below
pre-recession levels in many parts of the country. Doing so may be even more
difficult for the 37% of homeowners who say they`ve not yet or are not on track
to pay off their mortgage before they retire. 

Though most Americans don`t include punching the clock as part of their ideal
retirement, a surprising 68% of soon-to-be retirees say they plan to work at
least part-time after they officially leave the workforce. Doing more meaningful
work for pleasure or to help supplement retirement income may be part of many
Americans` plans, but what some also fail to consider is that an unexpected
illness or disability can impair a person`s ability to work as long as they
wish. 

Retirement in Balance - Health vs. Wealth
Health and finances are two of the biggest challenges that come with aging. When
asked whether they worry more about their health or their finances in
retirement, half of respondents admitted they are more concerned about their
health (53%), while only one-third (35%) answered with the latter. But the 5%
that answered "both" might be on to something - financial and physical health
often impact one another. 

It also appears that a significant number of Americans may not be familiar with
what their medical costs might be in retirement. More than half (56%) of
respondents admit they have not researched what Medicare covers, and 69%
acknowledge that they haven`t purchased long-term care insurance. Though future
medical expenses can be challenging to predict or calculate, these actions can
help alleviate financial stress should individuals encounter significant medical
costs as they age. 

So what can Americans do so that their emotions, confidence and retirement
expectations all align? The answer - continue taking steps to prepare. 

"The study reveals several action steps that those who feel the most confident
about affording essential expenses in retirement have taken, including having a
written financial plan, factoring inflation into their retirement plans and
calculating how much income their assets will produce in retirement," added de
Baca. "These are actions anybody can take, even if they are maxing out savings
or cannot afford to simply save more." 

About the survey
The Retirement Check-In® survey was created by Ameriprise Financial utilizing
survey responses from 1,000 employed Americans ages 50-70. All respondents have
investable assets of at least $100,000 (including employer retirement plans, but
not real estate) and are planning to retire at some point. The survey was
commissioned by Ameriprise Financial, Inc. and conducted via telephone
interviews by Koski research from October 31- November 14, 2012. The survey was
conducted among a targeted sample of households. Cell phones were approximately
25 percent of the sample. The margin of error is +/- 3 percentage points. 

About Koski Research
Koski Research is focused on having better conversations with key stakeholders -
customers and clients, influencers, business peers and the general public. The
firm combines high level proprietary custom research with research conducted for
public release. All of this research relies on asking engaging questions,
applying research acumen to create solid study designs and using marketing
smarts to produce executive-ready reports that lead to action. 

About Ameriprise Financial
At Ameriprise Financial, we have been helping people feel confident about their
financial future for over 115 years. With outstanding asset management, advisory
and insurance capabilities and a nationwide network of approximately 10,000
financial advisors, we have the strength and expertise to serve the full range
of individual and institutional investors' financial needs. For more
information, or to find an Ameriprise financial advisor, visit ameriprise.com. 

Brokerage, investment and financial advisory services are made available through
Ameriprise Financial Services, Inc. Member FINRA and SIPC. 

© 2013 Ameriprise Financial, Inc. All rights reserved.

Ameriprise Financial
Meghan Mumm, 612-671-0823
Media Relations
Meghan.l.mumm@ampf.com

Copyright Business Wire 2013

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