Courtneyk | E+ | Getty ImagesMany Americans are mistaken about their financial preparedness for retirement. But overconfidence skews higher for the wealthy than for others, according to a new report.Twenty-eight percent of all U.S. households have an overly rosy view: They think they’re on track to maintain their standard of living in retirement but are actually at risk of falling short, according to an analysis by the Center for Retirement Research at Boston College.The analysis examines these households by income group. Thirty-two percent of high-income households are “not worried enough” about their retirement risk, a larger share than the 26% of low and middle earners.More from Personal Finance:’Quiet luxury’ may be Americans’ most expensive trend ever3 steps to take before you start investingSocial Security may be key issue for GOP presidential rivalsThe divergence between perception and reality can be dangerous, experts said. Such households may be able to save more money during their working years but don’t know they should do so.”If they’re not aware they should be saving more, they run the risk of having to cut back their consumption — perhaps substantially — in retirement,” said Anqi Chen, senior research economist and assistant director of savings research at the Center for Retirement Research.They may also be unable to manage some risks in old age like higher health-care costs, added Chen, who co-authored the report. There’s an important caveat here: The meaning of being “at risk” differs between income groups. Low earners who are at risk may not be able to afford basic living necessities in old age, while an affluent household is unlikely to fall into poverty, for example, the analysis said.The affluent risk a “difficult adjustment that may require them to lower their expectations of their retirement lifestyle,” the report said.There are headwinds against retirement securityThe analysis leverages data from the U.S. Federal Reserve’s Survey of Consumer Finances, a triennial assessment of households. Its most recent iteration reflects 2019 data.The Survey of Consumer Finances defines income groups by age and marital status. For example, the 2019 survey defines married couples ages 45 to 47 as low-, middle- and high-income if their med …
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[mwai_chat context=”Let’s have a discussion about this article:nnCourtneyk | E+ | Getty ImagesMany Americans are mistaken about their financial preparedness for retirement. But overconfidence skews higher for the wealthy than for others, according to a new report.Twenty-eight percent of all U.S. households have an overly rosy view: They think they’re on track to maintain their standard of living in retirement but are actually at risk of falling short, according to an analysis by the Center for Retirement Research at Boston College.The analysis examines these households by income group. Thirty-two percent of high-income households are “not worried enough” about their retirement risk, a larger share than the 26% of low and middle earners.More from Personal Finance:’Quiet luxury’ may be Americans’ most expensive trend ever3 steps to take before you start investingSocial Security may be key issue for GOP presidential rivalsThe divergence between perception and reality can be dangerous, experts said. Such households may be able to save more money during their working years but don’t know they should do so.”If they’re not aware they should be saving more, they run the risk of having to cut back their consumption — perhaps substantially — in retirement,” said Anqi Chen, senior research economist and assistant director of savings research at the Center for Retirement Research.They may also be unable to manage some risks in old age like higher health-care costs, added Chen, who co-authored the report. There’s an important caveat here: The meaning of being “at risk” differs between income groups. Low earners who are at risk may not be able to afford basic living necessities in old age, while an affluent household is unlikely to fall into poverty, for example, the analysis said.The affluent risk a “difficult adjustment that may require them to lower their expectations of their retirement lifestyle,” the report said.There are headwinds against retirement securityThe analysis leverages data from the U.S. Federal Reserve’s Survey of Consumer Finances, a triennial assessment of households. Its most recent iteration reflects 2019 data.The Survey of Consumer Finances defines income groups by age and marital status. For example, the 2019 survey defines married couples ages 45 to 47 as low-, middle- and high-income if their med …nnDiscussion:nn” ai_name=”RocketNews AI: ” start_sentence=”Can I tell you more about this article?” text_input_placeholder=”Type ‘Yes'”]
