Retirement confidence declining: Putnam
Many people aged over 45 have robust expectations of what amount of money they will need for retirement, but the reality is 29 per cent will end up returning to work, according to the results of a US-based Putnam Investments study, “The ‘We’ Generation”.
The online study of more than 5,400 adults in the US found retirement income expectations were unrealistically high and that many people believed a windfall, such as inheritance, would bolster their savings.
However, Putnam managing director, market planning and development, Elizabeth Segers said the likelihood of this actually happening was slim.
“The issue of inheritance is a bubble we should probably burst — in America, only 1 per cent will inherit $1 million,” she said.
Segers said similar trends could be identified in Australia, making the study’s findings particularly pertinent to Australian financial planners and their clients.
She added that in light of the findings, perhaps the notion of retirement being a time for leisure should be re-written, as more and more retirees would need to return to work due to insufficient retirement nest eggs.
Segers said daily issues, such as bills, the mortgage and health care, have meant many people don’t think about the money they need to put aside for retirement.
Furthermore, the study found one in five people have taken their parents back into their home, and nearly one in three still have grown children living with them or are paying their rent, making saving for retirement difficult.
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