We all know the expression “life happens.”
It’s meant to be a comforting reminder that no matter what goes wrong, there are simply some things that are out of our control.
But in the face of major events like the Great Recession, the resulting housing crash, or even a medical emergency, sometimes it’s hard to shrug off the feeling that if we’d only been a bit more prepared, we might have fared better.
The overwhelming majority of investors aged 50 to 70 know the feeling all too well, according to a new survey by Ameriprise Financial.
About 90% of investors said they experienced at least one retirement “derailer” in their lifetime –– an economic or life event so costly it left their nest egg in tatters.
The average respondent said they lost $117,000 from such events, and nearly 40% said they’d experienced at least five derailers for a total cost of $144,000.
No wonder retirees are feeling so uncertain about their financial futures.
The top three retirement derailers cited by investors were, unsurprisingly, all recession-related: 63% blamed low interest rates for stunting the growth of their investments; 55% said market declines killed their savings; and 33% said their home equity is in the toilet.
What’s really surprising are the other derailers cited by investors: One in four are still supporting a grown child or grandchild and just as many said their pension plans have either been discontinued or worth less than they hoped for. Another 20% said they got caught up in bad investments, took Social Security out early, and/or experienced job loss.
The takeaway: Perhaps today’s older investors have managed to weather the storm of the recession, but it means they’re going into retirement less prepared than ever to handle another blow. Just 33% said they are confident they’d be able to afford an unexpected expense like home repairs in retirement, and 42% said they’re behind their savings goals.
If they had it to do again, the majority said they’d start saving earlier, which is a notion many young workers today should think about. The earlier you save, the more you will save –– period. Granted, it’s difficult to think about an IRA when jobs are hard to come by and fixed costs only get more expensive by the year. The point is that having some plan, even a small one, is better than no plan at all.
“These unanticipated events don’t always have to be retirement derailer,” said Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial. “They can be addressed with a plan in place.”