With his wife still working and the couple’s finances under control, Davey figures that he has the ideal plan in place. All that remains is to land a part-time job with another library to put the icing on the cake. But after submitting close to 20 resumes, Davey hasn’t fielded a single interview.
“I’ve looked for work in bad economies before, but this seems to be more difficult now than it’s been in the past,” he says. “What’s baffling me is that my resume hasn’t floated to the top with all the experience I have.”
If Davey is starting to feel anxious, then no wonder other retirees report financial jitters of historic proportions. The latest Well-Being Index from the Principal Financial Group reveals that 36 percent of retirees — up 15 percentage points from last year — are pessimistic regarding the economic outlook for the rest of 2011. That’s the biggest jump in the 11-year history of Principal’s survey.
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Principal’s third-quarter sampling of 549 retirees also shows that 67 percent are concerned about their long-term financial futures, up 24 percent from last quarter. By contrast, only 35 percent are “extremely happy” about their financial well being, down from 41 percent last quarter.
Blame the stock market, the recent turbulence in the equity markets, and a host of other factors home and abroad, says Luke J. Vandermillen, vice president of retirement and investor services with Principal.
“When people see their 401(k) balances go down, that triggers concern in the short and the long term,” Vandermillen says. “There’s trouble in markets outside the U.S., and I don’t think very many people would say that people in Washington D.C. are doing a bang-up job. And you can throw high gas prices in there.”
Yet if external factors have compressed retirement angst, experts say that the numbers should serve as a wake up call in terms of personal responsibility.
“My first reaction is, ‘Well, good,” Chris Bixby, a senior financial planner and vice president with Key Private Bank in Burlington, Vermont. “People should be more worried about their future and retirements than they have been. As a country, our savings rates have been minuscule and in a bad economy, those [statistics] are magnified. If people are concerned, it’s well founded.”
Other recent studies support and fill out the picture of retirement painted in the Well-Being Index. KRC Research, a global non-partisan opinion research firm, surveyed more than 1,000 U.S. adults last month, finding that 52 percent are at least “somewhat worried” about their personal financial situation— and almost one in three (27 percent) would rate their concern as “very worried.”
And Allianz Life’s 2011 Reclaiming the Future survey shows that Baby Boomers have been rattled by the economic upheaval, with 35 percent saying they feel financially “totally unprepared” for retirement — and 51 percent of non-retirees questioning whether 401(k), 403(b) and 457 plans are adequate ways to save for retirement.
Also last month, CouponCabin.com released a Savings and Spending Report, conducted by Harris Interactive, that reveals 45 percent of U.S. adults feel less financially secure than a year ago, while 16 percent said they “always worry about money.”
What to do then? Vandermillen and others stress the need for retirees to get sound professional advice, but that brings up another tricky issue: If you don’t feel secure about the money and investments you already have, how can someone convince you to part with a chunk of that money to see a financial planner?
“If you talk to a child of the Depression, they still hoard money,” says Jason M. Weaver, an Ameriprise private wealth adviser based in Huntington Beach, California. “They still have too much money in their checking accounts. They still hoard gold and silver. When they see this sort of volatility, they want to react to it, because [the past] is still fresh in their minds.”
The easy answer experts give is that a trusted planner offers a sounding board, and an expert set of eyes to review and tweak the overall financial game plan — one that takes into account tax deferment, health care costs and a long view beyond the short-term turmoil.
“It all comes back to that plan,” Weaver says. “You know that you’ve got liquidity to ride this out, but you’ve also got a diversified portfolio for beyond that.”
As for Davey, he and his wife prepared very well. When times were good — and consumers around them piled up high-interest debt — they mutually agreed to pay off their credit cards at the end of every month, leaving them debt free. They refinanced their mortgage, shaving two points off their interest rate and putting them five years away from paying off their home.
“We’re out of debt, we pay our bills on time and we live within our means,” says Davey, summing up a day-to-day retirement strategy that can ride out any economic storm.