Ameriprise Survey: Most Retirees Hit By Unexpected 'Derailers'

Thursday, 16 May 2013 07:51 AM

By Michael Kling

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When it comes to saving for retirement, expect the unexpected.

Most Americans are hit by at least one unexpected "financial derailer," an event making a serious impact on their retirement savings plans, according to an Ameriprise Financial survey of Americans ages 50 to 70 with $1000,000 or more in investable retirement assets.

In fact, 90 percent of the survey respondents experienced at least one such derailer. The average survey respondent experienced four such events, at a cost of $117,000 on average. Nearly two in five had five or more unanticipated events, costing them about $144,000.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

"Expecting the unexpected is clearly more important than ever in preparing for retirement," said Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial.

As expected, the recession had a huge impact on retirees and pre-retirees. Families were also blindsided by events like supporting a grown child or grandchild.

"The good news is that these unanticipated events don't always have to be retirement derailers — they can be addressed with a plan in place," de Baca said.

The three most common derailers were related to the recession: 63 percent said low interest rates impacted growth of their investments, 55 percent said their savings were significantly lowered due to market declines and 33 percent admitted their home equity will not help fund retirement as much as they had expected.

Other derailers were supporting a grown child or grandchild (23 percent) and that their pension plan is not worth as much as they'd thought or has been discontinued (23 percent).

In addition, 22 percent said their retirement goals were thrown off track by making bad investments, while 19 percent took Social Security before retirement age and 18 percent experienced a job loss.

America faces a "looming catastrophe" as baby boomers approach retirement with inadequate savings, said Ronald O'Hanley, president of asset management and corporate services for Fidelity Investments, according to U.S. News & World Report.

Fidelity's research shows that almost four in 10 retiree households lack sufficient income to cover their monthly expenses, O'Hanley said. Moreover, more than half of all Americans have less than $25,000 in total savings, not counting the value of their home or pension plans, and 28 percent have put aside less than $1,000.

"If tens of millions of Americans reach retirement with insufficient savings, the impact on our citizens, our economy and our national security could be catastrophic — and not something we could solve for most retirees after the fact," he said, according to U.S. News.

Editor's Note:
How You Lost $85,000 During the Last Decade. See the Numbers.

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