TEWKSBURY, Mass. -- Nearly one in five in a new AARP survey said they have stopped or reduced putting money into their 401(k)s and individual retirement accounts and 20% have postponed a planned retirement as a result of the current economic slowdown.
The AARP Financial Inc. surveyed 750 adults age 40 or older in preretirement households Aug. 1-21. Respondents had an annual household income between $35,000 and $100,000 and between $10,000 and $150,000 in savings and investments.
The survey revealed that 55% have not set their 401(k) contribution to the maximum allowed and 78% of those eligible have not made a catch-up contribution to a retirement plan. Twenty-two percent of respondents said they do have a formal written plan for retirement.
Putting off a planned retirement was a concern for those surveyed. Most believed the odds are 50% or less that they will be able to retire when they want. Seventy percent agreed that when it comes to retirement, no one is looking out for the "average person" while 67% are not sure where to go for help.
"Increases in the cost of basics such as food, healthcare and energy are accelerating," said Richard Hisey, president of AARP Financial. "Unfortunately, in these times--with necessities assuming a greater share of the household budget--retirement savings are frequently the first to take a hit."
Over half (59%) of the average working Americans surveyed give themselves a grade of C or worse when it comes to financially preparing for retirement, according to the survey.
Less than half (45%) of respondents are currently working with a professional financial advisor. Among those not working with a professional, 49% believe financial advisers are not interested in them because they don't have enough money.
Better than two out of five respondents (43%) said they spent more time planning their most recent vacation than they have spent planning for retirement. Twenty-eight percent said they have spent more time watching reality TV in the last month than they have spent planning and preparing for retirement over the last 10 years.
Part of the problem is the retirement knowledge gap, Hisey pointed out. Less than a third (32%) of those surveyed said they know enough about how to determine when they can afford to retire and only one in five said they know enough about how to generate income in retirement. A full 76% said planning for retirement is somewhat or very difficult. That knowledge gap can result in dangerous retirement planning assumptions, Hisey said. For example, while the median income of those surveyed was $66,000, the median amount they thought they need to save for retirement was $315,000. In fact, more than a third of pre-retired Americans (36%) think they will need less than $250,000 to retire.