U.S. workers forecast they’ll need an average $4,940 monthly income to enjoy a comfortable retirement, according to a new survey by Schroders.
The survey, which polled roughly 2,000 employees, found a third (32 per cent) believe they’ll need to replace between 50 per cent and 74 per cent of their final paycheque with other sources of income in retirement, while just a quarter (23 per cent) believe they’ll need to replace 75 per cent.
Just 10 per cent of respondents said they’ll wait until age 70 to receive their maximum social security benefit payments, a percentage that increases to 17 per cent among workers aged 60 to 65. Among respondents who said they’ll take social security before age 70, more than two-fifths (44 per cent) said they’re concerned social security may run out of money or stop making payments, while 36 per cent said they’ll need the money and 13 per cent said they were advised to take the money earlier than age 70.
In addition to social security, employees said they plan to generate retirement income from sources such as cash savings (58 per cent), workplace retirement plans (53 per cent), personal investments (40 per cent), defined benefit pension plans (20 per cent), rental income (14 per cent), annuities (10 per cent) and reverse mortgages (four per cent).
“We have a crisis of confidence in the social security system and it’s costing American workers real money,” said Deb Boyden, head of U.S. defined contribution pension plans at Schroders, in a press release. “Fear about the stability of social security has people walking away from money that could improve their quality of life in retirement. Many are not even waiting for their full benefit, let alone the maximum, which means they will have to create more income on their own [and] making it even more important to save and invest earlier for retirement.”