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Older Workers Way Off on Retirement Requirements, Survey Finds

June 26, 2008
Despite employer efforts to educate workers, many pre-retirees remain pretty clueless about their future financial security—or lack of it.

Insurer MetLife found that nearly seven in 10 retirees overestimate how much they can draw down from their savings each year while still preserving their principal. In fact, 43 percent of pre-retirees said they believe they can withdraw 10 percent or more from savings each year while still maintaining their nest egg. Most retirement experts suggest withdrawing no more than 4 percent annually.

MetLife surveyed 1,216 workers ages 56 to 65. Surprisingly, six out of 10 respondents underestimated their own life expectancy. About half low-balled the amount of income they’ll need after they retire.

Those are troubling results.

In many cases, retirees will simply outlive their savings. Sandra Timmermann, director of the MetLife Mature Market Institute, which helped compile the survey, said the fact that so many pre-retirees overestimate how much they can spend down from their retirement savings annually “should serve as a wake-up call for pre-retirees and advisors alike.”

One encouraging sign: About 60 percent of those who took the survey said they were seeking financial advice on such products as 401(k)s, retirement accounts and long-term-care insurance.

Filed by Matthew Scott of Financial Week, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.