Baby boomers approaching retirement lost, on average, more than $100,000 in savings due to the Great Recession, an Ameriprise Financial survey finds.
From low interest rates to lower-than-expected home equity, the recession took its toll in multiple ways, netting six-figure losses for 90% of those who had at least $100,000 saved for retirement.
Ameriprise surveyed a group of 50- to 70-year-olds with at least that level of cash savings and found that 90% reported experiencing at least one economic or life event that negatively impacted their retirement savings by an average of $117,000.
Another 40% said they were hit by five or more unexpected events, with average losses totaling $144,000.
“The lesson that we are taking away is expect the unexpected,” said Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial, in the report.
The most commonly cited “derailer” stemming from the Great Recession? Low interest rates, according to 63% those surveyed, which have impaired the growth of retirement assets (63%)
Other top derailers for retirement savings, according to Ameriprise, have been market declines (55%) and lower-than-expected home equity (33%). Retirement prospects for another 18% were compromised by job loss, while 23% cited supporting grown children or grandchildren as a derailer.
“The financial fallout from these events can be dramatic, costing Americans an average of $117,000 in savings,” said de Baca, adding that affluent individuals with investable assets of $750,000 or more took an average $177,000 hit.
As a result, nearly half of those surveyed reported less retirement savings than they had expected. Only 18% said their nest egg is larger than expected.
The research uncovered an “alarming” trend, says Ameriprise: As a whole, Americans nearing retirement are underprepared. The survey uncovered an approximately $250,000 gap between what respondents think they need to retire, and what they’ve actually set aside. More than half said they wished they had started saving earlier.
However, only 35% believe their ability to afford essentials in retirement will be affected ‘a lot’ or ‘a fair amount,’ while more than two-thirds still charactizer their road to retirement as ‘smooth’ rather than ‘bumpy.’
Read the Ameriprise Financial report.
Written by Alyssa Gerace