Revealing how daunting the transition can be for some, new research by Charles Schwab provides insights into people who are within five years of retirement.
The findings show that these pre-retirees are nearly as anxious about what the future looks like as the present, with 65% feeling overwhelmed by saving enough now for retirement and 52% feeling overwhelmed by how they will ultimately manage their different income sources once they enter into retirement.
Pre-retirees feel particularly anxious about how they’ll manage their income and spending needs once they move from an ongoing paycheck into retirement. For example:
- 72% are worried about running out of money;
- 57% are overwhelmed by determining how much they can spend;
- 60% are worried about not getting – or the thought of not getting – a regular paycheck; and
- 64% are overwhelmed by not being able to maintain their current lifestyle or quality of life.
What’s more, most pre-retirees consider managing retirement income more overwhelming than many other financial moments typically considered stressful, such as losing a job, buying a home or paying for college.
Planning for Retirement Income
Schwab further notes that people nearing retirement are concerned about several aspects of how they’ll manage their money once retirement begins. Among the top concerns are:
- managing different income sources and accounts in retirement (52%);
- managing the tax implications of withdrawing from multiple accounts (54%);
- knowing how to invest (50%);
- projecting how long their savings will last (57%); and
- managing unexpected expenses (59%).
Many respondents within five years of retirement also acknowledge that they are unfamiliar or worried when it comes to some important basics about retirement income, which may add to their stress level:
- Annual Required Minimum Distributions (70% know nothing/not a lot about this topic)
- Tax implications of retirement account withdrawals (70% know nothing/not a lot about this topic)
- Fees (48% are worried about paying too much for advice on managing retirement income)
“So much of the emphasis around retirement planning is on helping people save, but helping them transition into spending down from their portfolios in retirement is just as important,” notes Tobin McDaniel, Charles Schwab senior vice president of digital advice and innovation. “Millions of Americans are on the cusp of retirement, so developing solutions that enable investors to confidently manage their income needs in an easy, flexible and affordable way is one of the most critical challenges we are addressing.”
The research was conducted through an online survey by Logica Research from June 27 to July 16, 2019, among a national sample of 1,000 Americans aged 55 and older with $100,000 or more in investable assets.
