In a recent presentation hosted by the Long Term Care Discussion Group, retirement policy consultant Anna Rappaport and Barbara Hogg of Aon’s Retirement Practice discussed two recent surveys focusing on different aspects of retirement planning: the 2021 Retirement Risk Survey (focused on the different perceived retirement planning challenges between retirees and pre-retirees age 45 or older), and the Generations Survey (comparing financial management across generations across a broad range of financial issues, including financial fragility).
A common theme in both surveys was the COVID-19 pandemic’s dramatic effect on circumstances and perceptions about planning for and thriving in retirement. For example, the Retirement Risk Survey showed that 1 in 10 pre-retirees plan to retire later because of the pandemic, and more than 3 in 10 pre-retirees who experienced negative financial impacts from COVID-19 plan to retire either somewhat later or much later than they previously planned. Pre-retirees were also more likely than retirees to consider changing their lifestyle, working longer, and changing care arrangements for family. For those with a higher degree of financial fragility, the survey showed those individuals feel less financially secure as a result of the pandemic, prioritizing short-term goals over retirement planning. Fifty-eight percent of financially fragile individuals responded that the pandemic has created “major financial challenges” for them, compared to only 11% of low fragility individuals.
The Retirement Risk Survey also showed stark generational differences with respect to concerns about preparing for and managing finances during retirement. Pre-retirees were far more concerned than retirees about properly managing their finances for later-stage retirement, with 44% either very or somewhat concerned, compared to only 25% of retirees. This likely reflects a lower degree of uncertainty for those who are already living through retirement and who have a shorter time horizon for which they must manage their finances.
One exception to the general divergence in expectations and concerns between retirees and pre-retirees was the extent to which both groups planned to rely on family and friends for care later in life. Between the two groups, less than a quarter of survey respondents expected to rely on family or friends in any significant way. But for those who lived in multi-generation households, 71% of pre-retirees and 62% of retirees reported that where the arrangement involved elder care, living together made it easier to provide for elderly household members.
One of the most interesting—and unexplained—trends shown in the Retirement Risk Survey data was retirees’ declining concerns about their financial preparedness for retirement relative to 2019. For example, in 2019, 59% of retirees were either somewhat or very concerned that they may not be able to maintain a reasonable standard of living for the remainder of their lives. In 2021, that number dropped to just 30%, while the same concerns dropped from 58% to 40% for pre-retirees. Similarly, retiree concerns that they may not have enough money to pay for a long stay in a nursing home or to pay for home health care dropped from 62% in 2019 to 46% in 2021. The takeaway from this data was that, while pre-retirees maintained historically low levels of concern regarding their preparedness for retirement, retirees’ concerns dropped to an all-time low, even in the face of challenges posed by COVID-19.
View the recorded video presentation and the accompanying slide deck, which extensively summarizes data from both surveys, on the Long Term Care Discussion Group’s website.
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