Do You Get An “A” for Your Retirement Planning?

Report cardIn survey after survey, Americans have not scored well on retirement literacy tests. But a new survey of Americans ages 60 to 75 says 80 percent failed a retirement income literacy test. The results of the poll, released Wednesday by the American College of Financial Services in Bryn Mawr, Pennsylvania, are pretty dismal. The poll was conducted through online interviews of 1,019 people 60 to 75 years old with at least $100,000 in household assets.

These Americans were polled on 38 retirement literacy questions on basics like Social Security, life expectancy, IRAs, life insurance and investments, and the mechanics of bonds. Sadly, only 20% were given passing grades, the college said. This isn't the first survey to raise concerns about Americans’ retirement readiness. In an article titled Americans fail in retirement literacy,“ The (Palm Springs, CA) Desert Sunnoted similar shortcomings in a 2011 report.

However, the findings of that earlier report weren’t nearly as bad.

According to the article, retirement literacy and planning are critical today more than ever because Americans are on their own when it comes to retirement. Company pension plans typically have been replaced by company-sponsored 401(k) plans and IRAs.

The original article reports that many Americans — of all ages — didn’t have the best financial role models in their parents, nor do we get any formal training or teaching in the area of investments, Social Security, long-term care and related topics.

Here are a few highlights of the new report:

  • Only 1 in 4 have a written financial plan;
  • A significant minority have never figured out how much they need to retire;
  • Only 31% know that $4,000 is the most they can afford to withdraw per year from a $100,000 retirement account to make it last 30 years;
  • More than half underestimate the life expectancy of a 65-year-old man, meaning they might not know how long their assets must last; and
  • Just 54% realize that Social Security benefits increase each year you delay retirement up to 70 and don't know that it is best to wait until 70 to claim Social Security if you expect to live to 90.

The article states that many people lack important knowledge about financial products and investing in general: this collective financial ignorance threatens to undermine the security of retirees. Talk to an experienced estate planning attorney to make sure you are getting good grades regarding your retirement knowledge or can start now on some extra credit to ace this all-important test. 

You can learn more about this topic as well as other strategies on our website under the tab entitled: estate planning in Virginia. Be sure you also sign up for our complimentary e-newsletter so that you may be informed of all the latest issues that could affect you, your loved ones and your estate planning.

Reference: The (Palm Springs, CA) Desert Sun (December 6, 2014) Americans fail in retirement literacy


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Update to our Process

The unprecedented coronavirus pandemic has taken our entire country by surprise. We understand how difficult this time is for America’s businesses and families.  However, we believe it is vitally important that we make every effort possible to continue to offer solutions that avoid disrupting our important partnership with you, your family and friends.  As you know, estate planning is not something that should wait for a more convenient time, therefore the opportunity to address your important goals both during and after this crisis should not wait.  To that end, we have added the option of a ‘virtual consultation’ to our office process.  You will now have a choice of either meeting with us in our office or in the comfort of your own home.