The AARP surveyed (opens to pdf) over 5,000 American workers aged 50 or older and confirmed what many have believed to be true for some time now – that the Great Recession has radically changed the financial situation for many aspiring retirees and that the outlook for their golden years now looks grim. It seems that counting on your home equity to finance a life of leisure didn’t exactly work out as planned in our bubble economy.
The recession seems to have eroded confidence about the retirement years. Overall, more than half (52.6%) of those surveyed were not too or not at all confident that they (along with their spouse or partner) will have enough money to live comfortably throughout their retirement years.
Moreover, the 50-plus population - at least those surveyed in October 2010 - were worried about managing in retirement, and a variety of money matters concerned them: Retirement income that might not keep up with inflation (44.8% very concerned), not having enough money to pay for long-term care (44.3% very concerned), depleting their savings (39.3% very concerned), and not having enough money to pay for healthcare (39.2% very concerned).
But not being able to maintain a reasonable standard of living in retirement was the one item they were most concerned about, with 26% of respondents citing this as their top concern. Not having enough money to pay for adequate healthcare was a distant second. Few placed leaving money to children or other heirs at the top of the list. Nor was a surviving spouse or partner’s ability to maintain the same standard of living of most concern to many.
I’ll never forget that look on my dentist’s face in 2006 in California when I suggested that home prices might not continue to go up and that they just might fall. And they might fall a lot. Echoing the view of many at the time, he said, “They better not fall, my retirement is depending on it." He probably had to juggle his plans at least a little bit.