Most Retirees Fear Running Out of Money, Continue to
Draw Down Savings for Living Costs
Senior citizens more likely to withdraw from savings,
most do it to cover living expenses finds new survey
April 24, 2014 – More than half of retired
Americans (53%) are concerned about running out of money and 52% have
also been drawing money from their retirement savings – 59% to cover
everyday living expenses, according to the Perspectives of Retirement
survey conducted twice a year by PNC Financial Services Group. It also
finds older senior citizens are more likely to withdraw from savings.
Retirees are more likely to withdraw money as they
age (61 percent of 65-75 year olds), but nearly 40 percent of young
retirees (64 or younger) are already drawing down from savings. Almost
two-thirds (63 percent) are concerned that Social Security or pensions
will not be enough to cover expenses and needs in retirement, according
to the telephone survey conducted in February and March.
"Most retirees don't have a plan for drawing down
savings and that is a concern," said Joseph Jennings, senior vice
president of Wealth Management with PNC. "Using savings to cover
expenses indicates that retirees may not have a retirement income
strategy in place and are putting themselves at greater risk of
outliving their funds."
One-third (35 percent) say the amount of money they
use in retirement is about what they expected, but nearly as many (31
percent) had no specific expectations with the remainder split evenly
between those who are spending more and those who are spending less.
According to the survey, retirees concerned about
running out of money have made efforts to control their expenses, budget
more tightly and are taking various actions to reduce costs or raise
income, among other actions.
The 53 percent who fear running out of money
• Two-thirds have changed the way they manage
their money. Fifty-nine percent have reduced expenses and 41 percent
budget more carefully.
• Those who are concerned are more likely to say
they get a higher percentage of retirement income from savings or
investments (an average of 35 percent vs. 24 percent).
• The equity in their home is more likely to be
important to their retirement plans, however, they are more reluctant to
rely on the equity.
• They have significantly fewer assets: On
average, total investable assets are $225,000, compared with average
assets of $411,000 among those who are not concerned.
The survey also found that retirees continue to
rely heavily on Social Security. Almost eight in 10 (77 percent) receive
Social Security, while 66 percent have a pension and 50 percent use
money from savings and investments.
"The need for early retirement planning is crucial,
and those nearing retirement can no longer take risk out of their
portfolios. We're living longer and need more funds to afford our
longevity," said Jennings. "Younger generations do not have pensions to
rely on, so early planning is more important than ever."
The PNC Financial Services Group, Inc. (www.pnc.com)
reports to be one of the United States' largest diversified financial
services organizations providing retail and business banking;
residential mortgage banking; specialized services for corporations and
government entities, including corporate banking, real estate finance
and asset-based lending; wealth management and asset management.
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