Retirement planning reality check

Investors who reach midlife with substantial assets have a good reason to feel proud. That money represents decades of hard work, careful stewardship of wealth, and the potential for a secure retirement 15 or 20 years down the road.

Yet a single number simply showing how much you’ve saved can be misleading. Without a clear understanding of what your retirement costs will be, and of the potential risks that could set you back, that number, however sizable, could fall short of providing for your retirement plan.

Regularly failing to examine retirement planning is revealed in findings from the Retirement Confidence Survey with only 68% of surveyed workers reporting they or their spouse have saved any money for retirement. But confidence can only go so far. And when it comes to knowing if they’ll actually have enough, less than half (46%) have truly looked closely at their needs^†.

Midlife is the time to get specific on retirement. Where do you want to live, what will you spend, and what could set you back?

Planning for retirement risks

One crucial step is to ask whether you’ve accounted for potential pitfalls that could disrupt your retirement planning, such as caring for aging parents, an unexpected illness, a risky investment strategy, or even job loss. Any of these situations could compromise your future.

In a 2022 study by the National Bureau of Economic Research, more than 60% of survey respondents approaching retirement age expressed regret for not having saved more during their working years. Most of these individuals had not purchased long-term care or longevity insurance, leaving them susceptible to health costs and other significant expenses^‡.

For instance, a 50-year-old business executive, facing the dual challenge of supporting her aging parents and putting her kids through college, might decide to take a temporary break from retirement saving. Yet doing so would risk losing momentum and growth potential during her highest-earning years.

A majority of surveyed American workers (61%) are “significantly concerned” about their future healthcare expenses; only 26% of those workers have figured out their monthly income needed to cover their needs in retirement^§. Retirement health costs could shrink what might have seemed like a substantial nest egg and jeopardize their retirement plan.

I recall working with a Midwestern husband and wife, aged 49 and 50, who had a net worth of $4 million. They assumed they would have plenty during retirement to pay for a second home in a warmer climate, extensive travel, and educating every future grandchild. But a look at their portfolio revealed an overconcentration of stocks in the small, publicly traded technology firm where the husband worked. If that single company were to falter or fail, all or most of their retirement dreams might be in jeopardy.

These or other potential obstacles may appear as you prepare for your own perfect retirement. While there’s no telling what challenges lie ahead, careful retirement planning and the insights of an experienced advisor may help put you on a path to a retirement backed by solid numbers, a careful assessment of risks, and a balanced plan for the future.

Connect with your Huntington Private Bank advisor to outline a plan that can help alleviate your concerns and protect your retirement. To learn more, please contact your Huntington Private Bank team to see how we can help, or find a Huntington Private Bank Office near you.