Investors Say Health Care Costs Biggest Threat to Retirement Security

Seventy-eight percent of investors overall feel that funding retirement is increasingly their responsibility, not the government’s, according to the Natixis Global Asset Management 2017 Individual Investor Survey.

One-third of investors overall believe government benefits will be unavailable when they retire. This breaks down to 41% for Millennials, 33% for Generation X and 22% for Baby Boomers.

Interestingly, the younger age cohorts expect to retire early, even though they are most likely to live longer. Millennials say they plan to retire at age 59, Gen X at 58 and Baby Boomers at 65.

Personal savings are expected to be the most important retirement income source for 98% of investors. Eighty-one percent rank public pensions or Social Security benefits as an important retirement income source.

Family resources are expected to be a big part of retirement income—77% for investors overall and 81% for investors with children. The family resource most likely to contribute to retirement income is a spouse’s retirement savings (77%). More than four in 10 (43%) investors expect to rely on an inheritance, and 38% say contributions from children will be a source of retirement income. More Millennials (62%) expect to receive an inheritance than Gen Xers (42%) or Baby Boomers (31%).

U.S. investors surveyed rank long-term care and health care costs (27%) as their biggest threat to financial security in retirement. They also cite “not saving enough” (19%); “government benefits won’t cover enough” (11%); “inflation” (12%) and “outliving assets” (15%) as threats to financial security in retirement.

The survey results show investors are being proactive in retirement planning. Sixty-two percent say they have clear financial goals, and 56% say they have a financial plan that is helping them reach their goals. Seventy-three percent say they have a general figure in mind for how much is needed to be saved for retirement, and 62% report they know how much they need to save each year to meet retirement funding goals. Sixty-nine percent have estimated the expenses they will have during retirement, and 64% know how much income they will need annually to fund their desired retirement lifestyle.

However, the survey found that, despite the tax implications of missing required minimum distributions (RMDs), some Baby Boomers are unaware of these regulations or don’t understand them. Twenty-eight percent report they don’t fully understand the RMD requirements; 25% of Boomers who have a financial adviser say that person has never talked with them about RMDs, and 39% have not explored proactive ways to manage the tax impact of their withdrawals.

Investors understand the value of getting financial advice; 76% say a financial adviser can help them achieve their financial goals, and 62% believe they will still need financial advice in retirement. Sixty-nine percent say investors who have a professional financial adviser are more likely to reach their financial goals than those without one.

Natixis surveyed 750 individual investors across the U.S. with a minimum of $100,000 in investable assets. The group included 223 members of Generation Y, also known as Millennials (ages 21 through 36); 251 from Gen X (37 through 52); and 236 Baby Boomers (53 through 72), as well as 85 retirees. The online survey was conducted in February and is part of a larger global study of 8,300 investors in 22 countries and regions from Asia, Europe, the Americas and the Middle East.