By Joseph A. Ruhl, Esq. | Regional President, Orange Bank & Trust | 914-422-3100 jruhl@orangebanktrust.com
Although everyone knows that it”™s important to save for retirement, it is a hard habit to acquire and maintain. That accounts for the success of 401(k) plans, in which the retirement contribution happens before the paycheck is received. Still, the employer plan is just one leg of the three-legged stool needed for financial security in retirement””the other two are Social Security and private, after-tax savings.
A study from the National Bureau for Economic Research examined the regrets expressed by 1,764 persons over age 50. Two-thirds were already retired. Some 57% reported that they regretted not having saved more for retirement. The next largest regret, at 40%, was not buying long-term care insurance, followed by 37% who believed that they should have stayed longer in the workforce. A lifetime annuity provides guaranteed monthly payments throughout retirement, and 33% wished they had purchased such a plan. Meanwhile, 23% regretted not delaying their Social Security benefits to get a larger monthly payment, and 10% regretted becoming financially dependent upon others.
The study participants were divided into three groups. The first group was a control, the second had subjective information on longevity, and the third had objective information on longevity, the likely length of their retirements based upon actuarial tables. Interestingly, with more information at hand, the amount of regret rose. Regret for not having long-term care insurance doubled, and regret for not having an annuity rose by 2.4 times.
The bottom line would be that younger people need to receive more information on the longevity risk in retirement while there is still time for them to do something about it. Coupled with tax incentives for retirement savings, such education could help more people have more secure retirements.
Leaving your work and career behind may not be on your mind yet. Still, the experts in our Wealth Management division at Orange Bank and Trust can prepare you for a regret-free retirement and help you plan, build wealth for an enjoyable retirement, and protect your assets and your family and leave a legacy. To learn more, visit OrangeBankTrust.com
