Plan Sponsors need to rethink investment expectations and spending behaviors due to factors which shape today’s Retirement Landscape. There are multiple reasons why investment return expectations need to be monitored and periodically adjusted; one being the investing themes present in our current economic conditions. Another reason to ratchet-down the anticipated investment return expectations is driven by misconceptions shared by individuals anticipating retirement in the near future.
The J.P. Morgan Retirement Strategist Team (led by S. Katherine Roy, Chief Retirement Strategist) has released the 2016 Edition of Retirement Insights – Guide to Retirement which is segmented into categories including Retirement Landscape, Saving, Spending and Investing.
The current Misconceptions cited in the research include the sentiment that “I’ll continue to work during my retirement.” (While 67% of workers feel they will continue to work into retirement – only 23% actually do. Contributing to the disconnect between expectations and reality are healthcare issues, family obligations and employer issues.)
Another Misconception addressed is the sentiment that “My spending patterns will not change that much when I retire.” (Unfortunately that is expectation is not the norm. The reality is that retirement-age Americans spend disproportionately more on inflation-sensitive expenditures such as health-care.
The research points out the different areas where retirees have Total Control, Some Control or No Control over different aspects of their total Retirement Equation.
Longevity is a factor in any retirement funding strategy. As Americans continue to enjoy an increasingly more optimistic life expectancy, such progress can play havoc with retirement planning – part of the Retirement Equation where the retiree does have some control, with the emphasis being on the word “some.”
It stands out as a compilation of current trends and the financial impact of those trends presented in new and established graphic representation. This research has valuable and practical information for every plan fiduciary and C-suite executive.
