This is a story that gets more frightening with each telling. It has to do with an estimated 30 to 35 million Americans who, for one reason or another, simply have no plans to protect themselves against the very real possibility of outliving their assets.
A survey conducted by the Society of Actuaries (SOA) found that half (48 percent) of Americans ages 45-70 are totally unprepared financially for their final years of life or for the rising cost of healthcare should they live longer than they expected.
Additional findings show that more than one-third at least are worried about running out of money during retirement. The rest appear to be oblivious as to what’s going to happen to them when they find themselves still alive, old and penniless with no one to take care of them.
Lack of planning
Only 20 percent of this massive demographic actually plan on financing their final years by buying an annuity or some other form of guaranteed lifetime income to protect their assets.
Anna Rappaport, FSA, MAAA and president of Anna Rappaport Consulting, says it's apparent that consumers, specifically the baby boomer generation -- many of whom will be eligible for retirement this year -- have not saved enough money for retirement.
Rappaport adds that as actuaries, “We cannot stress enough the importance of having a plan in place that addresses all of the risks individuals may face in retirement, such as spending available assets too soon, meeting financial care needs, paying for the rising cost of healthcare and adjusting financially and otherwise to the loss of a spouse."
The survey also found that nearly three quarters (71 percent) of respondents plan to claim Social Security before the age of 70. However, actuaries like Rappaport emphasize the importance of claiming Social Security as late in life as possible to secure more guaranteed lifetime income in retirement and hedge against the risk of outliving assets.
As for other actions people could take to protect themselves, the SOA survey found that only 19 percent plan to insure the extra costs of disability and well-being by purchasing long-term care insurance.
The SOA's survey findings were based upon a nationally representative online survey of 1,006 individuals, ages 45-70, and had an error rate of plus or minus 3.10 percentage points.
