Northwestern Mutual

As Social Security Marks 80th Anniversary, One Third of Americans Believe There is Greater Than a 50% Chance They Will Outlive Their Savings

MILWAUKEE, Aug. 11, 2015 /PRNewswire/ -- As the nation marks the 80th anniversary of the Social Security Act being signed into law this week, new findings from Northwestern Mutual's 2015 Planning & Progress Study reveal how much of the country feels they have little to no financial safety net.

The Longevity Risk: Will Americans Outlive Their Savings?

This annual study, exploring Americans' attitudes and behaviors towards finances and planning, reveals that longevity risk – or the possibility of outliving your savings – is one the starkest examples of a serious financial fear that has largely gone unaddressed by Americans.  According to the research:

  • One third (31%) of U.S. adults believe there is greater than a 50% chance they will outlive their savings;
  • More than one in ten (12%) think there is a 100% chance their savings will run out someday;
  • One in four (24%) Americans are unsure if their savings will last;
  • More than half (52%) say they have not taken any steps to address the risk of outliving their savings; and
  • Nearly a third (30%) say it is not at all likely that Social Security will be there for them when they need it.

"When people look beyond this week, this month and this year, they're worried," says Steve Sperka, vice president, Northwestern Mutual. "They're unsure what they'll need to be financially secure and they suspect their savings won't last.  That fear can lead to paralysis, but ignoring the problem doesn't make it go away.  This should all be addressed in a financial plan that sees beyond the short-term."

No Safety Nets
As revealed in a previous wave of this study's findings, working Americans expect to retire at age 68 – a full decade later than when current retirees left the work force. Notably, 62% of those anticipating working beyond the traditional retirement age of 65 say it will be from necessity, with the vast majority (79%) citing insufficient savings and lack of confidence in social safety nets as leading concerns.

When asked about their primary safety net if they do outlive their savings, more than half (52%) of Americans expressed uncertainty:

  • One quarter (26%) said they don't know what their safety net will be; and
  • Another quarter (26%) don't think they will have a safety net

As for Social Security specifically:

  • 30% of Americans believe it is not at all likely to be there when they need it;
  • 52% believe it is somewhat likely to be there; and
  • 18% believe it is extremely likely

Matures: A Cautionary Tale
The oldest generation of Americans – Matures (age 69+) – shed some interesting light on the issue of longevity risk.  They rank outliving their savings as their third-greatest financial fear right behind an unplanned financial emergency and unplanned medical expenses; and they do so at higher numbers than any other generation (30% vs 27% of Boomers, 20% of Gen X and 9% of Millennials). 

"Older Americans are closer to the reality of longevity risk, so they're feeling it the most acutely," notes Sperka.  "But the takeaway from that – for every generation – should be the same: this is one of the most critical financial goals you'll face in life.  So plan for it the same way you plan for other major milestones – marriage, home purchases, children, college savings, estate planning and more. Addressing longevity now helps diminish the fear factor, as you age."

About the Research
The 2015 Northwestern Mutual Planning & Progress Study explores the state of financial planning in America today, and provides unique insights into people's current attitudes and behaviors toward money, goal-setting and priorities.

This study was conducted by Harris Poll on behalf of Northwestern Mutual and included 5,474 American adults aged 18 or older who participated in an online survey between January 12, 2015 and January 30, 2015. Results were weighted to Census targets for education, age/gender, race/ethnicity, region and household income. Propensity score weighting was also used to adjust for respondents' propensity to be online. No estimates of theoretical sampling error can be calculated; a full methodology is available.

About Northwestern Mutual
Northwestern Mutual has been helping families and businesses achieve financial security for nearly 160 years. Our financial representatives build relationships with clients through a distinctive planning approach that integrates risk management with wealth accumulation, preservation and distribution. With $230 billion in assets, $27 billion in revenues, nearly $90 billion in assets under management in our investment products and services, and more than $1.5 trillion worth of life insurance protection in force, Northwestern Mutual delivers financial security to 4.3 million people who rely on us for insurance and investment solutions, including life, disability income and long-term care insurance; annuities; trust services; mutual funds; and investment advisory products and services. Northwestern Mutual is recognized by FORTUNE magazine as one of the "World's Most Admired" life insurance companies in 2015.

Northwestern Mutual is the marketing name for The Northwestern Mutual Life Insurance Company, Milwaukee, WI, and its subsidiaries. Northwestern Mutual and its subsidiaries offer a comprehensive approach to financial security solutions including: life insurance, long-term care insurance, disability income insurance, annuities, life insurance with long-term care benefits, investment products, and advisory products and services. Subsidiaries include Northwestern Mutual Investment Services, LLC, broker-dealer, registered investment adviser, member FINRA and SIPC; the Northwestern Mutual Wealth Management Company, limited purpose federal savings bank; and Northwestern Long Term Care Insurance Company.

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8/11/2015 8:00:00 AM