Data released by PNC last week showed more than half of retirees are worried about running out of money, and nearly the same percentage have withdrawn funds from retirement savings without a strategy in place.
According to PNC’s semi-annual survey on retirement perspectives, retirees are more likely to withdraw money as they age, but approximately 40 percent of younger retirees below the age of 64 already withdraw from savings.
Two in three retirees said they are worried that benefits like Social Security or pensions will not be adequate to cover living expenses in retirement.
“Most retirees don’t have a plan for drawing down savings and that is a concern,” Joseph Jennings, the senior vice president of wealth management at PNC, said. “Using savings to cover expenses indicates that retirees may not have a retirement income strategy in place and are putting themselves at greater risk of outliving their funds.”
One in three retirees said in the survey that the amount of money they use in retirement is close to what they expected, but nearly as many said they had no expectations, with the remainder split between retirees who spend more than expected and those who spend less.
Of the majority of retirees who worry about running out of savings, their concerns have led them to change the way they manage their money, with approximately 60 percent having reduced expenses and 41 percent budgeting more carefully.
Additionally, the survey found that retirees rely heavily on Social Security benefits—approximately 80 percent receive Social Security, while 66 percent receive a pension and 50 percent use money from savings and investments.
“The need for early retirement planning is crucial, and those nearing retirement can no longer take risk out of their portfolios,” Jennings said. “We’re living longer and need more funds to afford our longevity. Younger generations do not have pensions to rely on, so early planning is more important than ever.”