We recently completed a study with Retirees and soon-to-be Retirees to identify the enormous retirement gap that is purported by both the media and politicians. We conducted numerous focus groups across the country and we also conducted online research with 846 individuals who had retired more than 5 year ago and 739 individuals who plan on retiring within the next three years. These households had retirement savings of at least $300,000 but did not exceed $2.5 million.
What did we find? First, we found our initial methodology had a flaw. When we originally conducted focus groups in New York City and Florida, we were surprised at how many individuals were government employees or teachers and therefore had a pension. Of course, they were not experiencing a “retirement gap” and those who were relying merely upon a 401(k) plan were afraid to talk. We changed the methodology and made sure that our sample, both for focus groups and online, excluded anyone with a pension plan. We anticipated that those relying mostly upon their distribution or rollover from a 401(k) plan were the most likely to be experiencing a “retirement gap”.
Almost three quarters of Retirees in our study denied that they were living below the lifestyle that they had planned during retirement. Almost half indicated that the market crash of 2008 and 2009 had no effect on them. Twenty nine percent indicated that their income went down a little and 20 percent indicated that their income went down significantly. To counter the downturn, most indicate that they reduced their expenses a little. Less than 1 percent went back to work.
While there does not currently appear to be a “retirement gap” among the Retirees surveyed, 88 percent worry about their monthly income being impacted by a market downturn or by living longer than they expect. The study was fielded during the time when the market was obtaining all-time highs. This week, the market has experienced a significant downturn. It will be interesting to see if Retirees begin to feel a little bit more of a “gap” in the near future, or if the dramatic increase of 2013 continues to allay their fears.
For more information about Spectrem's Retirement Income Gap Solution report click here