Running out of money during retirement is a big fear for many Americans. To cope, 25% of the middle class expects that they’ll need to work until they’re at least 80 years old before they can comfortably retire, according to a Wells Fargo survey.
Only 20% of respondents think retiring is about a specific age rather than savings, while 76% are waiting to save a specific amount of money before they retire. And even after retiring, 74% expect to work, 39% because they will have to in order to make ends meet.
"The fact that the vast majority of middle class Americans expect to work well past the traditional retirement age has significant societal and economic implications," said Joe Ready, director of Wells Fargo Institutional Retirement and Trust. "Will people be physically and mentally able to work later in life? What will it mean for young people entering the workforce? And, how does our system of retirement savings need to be reformed to help reduce the savings gap?"
People’s acceptance of potential cuts to future Social Security and Medicare benefits unsurprisingly varies depending on age. Half of the respondents between the ages of 25 and 49 are willing to accept cuts, but that drops drastically the closer people get to retirement age. Of those between the ages of 50 and 59, only 28% are willing to accept cuts, and that number drops even lower to only 19% for those ages 60 to 75.
The survey suggests that part of the large divide between those on either side of 50 years old might be because the younger generation isn’t counting as much on Social Security now. Twenty-six percent of those in their 20s and 28% of those in their 30s expect they won’t receive any income at all from Social Security during retirement.
"We've seen a shift in the role of work and employment during the traditional retirement years but we're also seeing a shift in expectations for social support,” said Laurie Nordquist, director of Wells Fargo Institutional Retirement and Trust.”There is a willingness among younger Americans to put traditional support systems on the table for reform as we look for solutions to strengthen the country and address the debt load of our nation."
There’s also a large divide depending on household income. Respondents who earn more than $100,000 were more willing (55%) to consider benefit cuts, while only 39% of those earning between $25,000 and $49,000 were willing to take a reduction.
Expecting that they’ll need all the money they can save, 43% of respondents expect they won’t leave any inheritance to their children. Those who make more than $100,000 aren’t much more optimistic with 29% expecting to leave no savings behind.