The whispers you hear about looming retirement when celebrating your 50th birthday increase to a full-throated roar by the time you turn 55.
Unfortunately, many people who are just 10 years short of the traditional retirement age of 65 are woefully underprepared for their golden years, according to a recent Prudential survey of Americans ages 55, 65 and 75.
The following focuses on the responses from 55-year olds, who Prudential notes are “far less financially secure than older generations.” Here is why folks in their mid-50s face a potentially rocky road ahead.
Their savings shortfall
A mere decade before the traditional retirement age, 55-year-old Americans have a median retirement savings of a paltry $47,950.
Prudential recommends most people that age should have eight times their annual income saved for retirement, or about $446,565 based on the average salary.
If you are trying to build up a nest egg quickly, listen to the tips in our podcast “5 Fast Ways to Turbocharge Your Retirement Savings.”
Their longer lifespan
Over the past century, lifespans have increased significantly. That is the good news.
However, longevity translates into a longer retirement, and a need to stretch your dollars further. A huge savings shortfall has left 67% of 55-year-olds worried that they will outlive their savings.
They are more likely to be ‘sandwiched’
Those who are 55 are nearly twice as likely to be supporting parents — and nearly three times as likely to be supporting adult children — as the 65-year-olds Prudential also surveyed.
This is putting “pressure from both sides” on folks who are 55, according to Prudential.
They are less likely to use an annuity
Nearly three-quarters — 71% — of surveyed 55-year-olds are interested in annuities. However, just 6% plan to use them during retirement.
By contrast, 65-year-olds are twice as likely to turn to annuities, and 75-year-olds are three times as likely to do so, according to the survey.
Annuities come in many varieties, and all have their pros and cons. For more, check out “4 Reasons To Buy an Annuity — and 4 Reasons To Walk Away.”
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