We aren't thinking about how to cover ourselves until it's too late
The more work we have to do ourselves, the less we actually get done. At least when it comes to planning our retirement.
A study from the American Academy of Actuaries, along with their British and Australian counterparts, says that retirement planning is too complicated for anyone to understand, and half of the workers in these countries aren’t financially ready for retirement.
The problem: We can’t solve our own retirement woes because we are personally in charge of them.
“Many people start planning but can’t follow through because they aren’t equipped to address complex questions like how much they need to save for retirement, how they will cover the risk of an especially long life, or how they will handle unexpected costs associated with chronic health conditions as they age,” says American Academy of Actuaries senior pension fellow Ted Goldman. “A concerted effort by policymakers to support education initiatives could help savers sort out the tough questions they face as they prepare for their retirement future.”
The in-depth study found that retirement issues are a worldwide problem. Differences in countries, cultures, and laws do not change the fact that many people across the world are not financially prepared for retirement.
The study says that all three countries have made an effort to change how retirement planning is handled, but it has “been modest at best.” Work has been done, but it’s not effective or helpful. Especially for humans who aren’t good at working on things in the long-term.
“Inertia and procrastination — broadly characteristic of most people’s decision-making — seem to lead to similar results across all three countries,” the study says.
We’re bad at predicting our needs
On average, most people don’t know how much money they will need in retirement. They can’t predict chronic health issues or the inability to not work longer, so they don’t have any idea of how long their money will last.
Even if they have an idea, by the time they realize it, they don’t have the ability to catch up their savings to reflect it. But really, most people aren’t financially prepared for any sort of retirement.
Another revealing part of the study is that women are proven to be less financially prepared for retirement in all three countries over their male counterparts.
This isn’t new. Women earn less and therefore save less, especially for retirement. Women aren’t taught about how to handle finances — both earning and spending — and have a hard time talking to others about it, whether it’s a friend or professional. Even as women are better savers than men, they aren’t doing enough to prepare themselves because no one is telling them that it’s okay to do so.
The ignorance that women hold onto when not discussing finances can hurt them in the long run. The vast majority of women fail basic questions on money management for their savings accounts and most don’t know what it takes for them to be prepared for retirement. Even as women believe they are financially prepared, they really aren’t, especially when it following the loss of a partner.
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Article last modified on December 26, 2017. Published by Debt.com, LLC . Mobile users may also access the AMP Version: No One Knows How Their Retirement Plan Works - AMP.