Investors plan to retire when they qualify for Social Security but know it won’t be enough to live on. Majority plan to spend same or more money in retirement.
New York, NY – November 24, 2020 – According to the 2020 Schroders Global Investor Study, the majority (51%) of US investors said reaching the age to qualify for Social Security would be the reason they retire, while only 4% said hitting their financial target for retirement savings would be the trigger.
At the same time, 62% said they know Social Security benefits won’t be enough to live on, and 48% are concerned about not having enough income in retirement.
Perhaps that’s why 70% of investors report saving at least 10% of their annual income specifically for retirement.
It may also be why far more US investors (35%) would invest disposable income into their retirement savings or another type of investment, like equities or bonds (27%) than spend it on a luxury item purchase (5%).
“It’s very encouraging to see so many investors telling us they are saving at least 10% each year for their retirement, especially when you consider this survey was taken as COVID-19 was spreading in the second quarter,” said Joel Schiffman, Head of Intermediary Distribution, North America, Schroders. “They recognize that Social Security may not be enough, are concerned about having sufficient income when the time comes, and despite today’s challenges, remain focused on ambitious levels of savings for their retirement.”
Mr. Schiffman cautioned that investors who want to retire as soon as they qualify for Social Security might think twice before taking their pay-out benefits too early.
He added: “If investors start taking their benefits as soon as they qualify for Social Security, they could be leaving money on the table. If they are able to delay by just a few years, they could enjoy higher levels of annual Social Security income for the rest of their lives. Judging by their expectations about spending, they may need it.”
When Retired: Investors to Spend Same or More Money;
Many to Work Same or More Hours
Compared to the hours they work today, almost 4 in 10 (37%) investors surveyed expect their working hours per week will stay the same or increase in retirement.
The majority (56%) also said their spending habits in retirement will increase or remain the same as they are today.
Investors in retirement report that’s exactly what happened: 51% of retired respondents said their spending increased or stayed the same in retirement. In terms of the hours they work,31% of retirees said their hours stayed the same or increased after retiring.
With Age Comes Wisdom, and an Appetite for Risk?
Perhaps surprisingly, 50% of retired investors added high-risk investments to their portfolios when the markets hit extreme volatility in February and March due to the pandemic.
Another 28% of retirees stayed the course, making no changes to their portfolios.
About the survey
The Schroders Global Investor Study was conducted in the second quarter of 2020 among over 23,000 investors from 32 locations around the globe. The independent online survey included 1,500 US respondents who will be investing at least $10,000 in the next 12 months and who have made changes to their investments within the last 10 years.
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Jennifer Manser, Head of Marketing & Communications, Americas
Joe Collins, 914-686-5599, firstname.lastname@example.org
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