Schwab Study Finds Nearly Half of Retirees Supporting Others in Retirement

Added Financial Strain Highlights Need to Prepare for Realities of Retirement

Tuesday, September 8, 2009 5:00 am PDT

Dateline:

SAN FRANCISCO

Public Company Information:

NASDAQ:
SCHW

SAN FRANCISCO--(BUSINESS WIRE)--The fourth Real Life Retirement quarterly pulse survey by Charles Schwab & Co., Inc. reveals that many retired Americans are lending financial help to their families, either by giving them money or managing their finances directly. Almost half (44 percent) of those who are retired admit to supporting at least one individual financially. Children (53 percent) and grandchildren (37 percent) top the list of such dependants. An additional 12 percent are contributing to their parents' finances.

“Whether it’s their children, grandchildren or their own parents, more and more retirees are finding themselves supporting family members and, simultaneously, witnessing portions of their hard-earned savings disappear,” said Mark Jamison, vice president at Charles Schwab. “This is just the sort of retirement reality that we really encourage clients to prepare for – the unexpected.”

Tips for Dealing with Financial Pressures from All Sides

Your Retirement Takes Priority: Putting your own finances ahead of others may be tricky to stick to but is essential to your retirement. Take time now to determine how much you would like to have set aside for retirement which depends upon a realistic assessment of the lifestyle you want to have when you stop working.

Helping Your Parents: Your own retirement comes first, but your folks’ retirement is a very close second. Beyond a check, there may be more sustaining ways to help them help themselves:

  • Check up on their retirement entitlements such as Social Security and Medicare
  • Do they have assets such as a house they could borrow against?
  • Help them establish a realistic budget.
  • Make sure they have an appropriate plan in place for generating income from any existing investments
  • Can other siblings help out as well?

Supporting Your Kids: As much as you love them, children should be last on your priority list financially. Take this opportunity to demonstrate good habits – working with them through your own budgeting and debt management. Encouraging their financial independence now will actually be to their benefit in the long run.

A Frugal Future

Almost half (44 percent) of retired respondents reported that an unsteady economy has made them more frugal with their spending in the past six months. Those still working have an eye on this approach too. More than one in three (37 percent) Americans who have yet to retire predict that due to the economy’s fragile state, they will be spending more conservatively during their retirement than they originally planned.

Gender Divide

Six million more women than men (44 million versus 38 million) are planning to be more mindful of their spending during retirement than they might have been before encountering today’s unstable economy. The difference extends to current retirement savings. According to the survey, on average, men have secured more funds for their golden years than women ($247,000 vs. $180,000).

Putting in Longer Hours

Another strategy to cope with tight purse strings is to simply stay in the workforce longer. Close to four in ten (35 percent) Americans who haven’t retired yet plan to delay this milestone. Similarly, some of those on the other side of the coin are wishing they hadn’t stopped working so early; almost one in five (17 percent) retired Americans are considering returning to work, at least part-time, due to the economy.

“The economic downturn has reminded us how important it is to be financially prepared for just about any possible scenario,” said Jamison. “Adjustments can and must be made to accommodate this added financial weight in retirement. However, as much as possible, anticipating these added costs in retirement and concentrating on saving now can be the difference in achieving a successful retirement.”

Continued Asset Gap

Findings also show a consistent lack of savings among pre-retirees. The average amount of money respondents have put away for retirement is $219,000 which is nearly $1,800,000 less than most commonly believe they will need to retire comfortably. Not coincidentally, one-third of survey respondents (35 percent) currently plan to retire later than planned.

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment, tax or legal advice. Any investments and strategies mentioned here may not be suitable for everyone. You should consult with a financial professional for more information.

For More Information

Charles Schwab encourages individuals to take advantage of Schwab’s Real Life Retirement Services, which provides a realistic approach to retirement, not only offering key insight into actionable ways to save for and manage retirement savings, but also providing guidance on products and services and access to stories from Americans who have successfully moved into life’s third act. For more information please visit, www.schwab.com/RealLifeRetirement.

About the Study

The Charles Schwab Q3 Retirement Omnibus Survey was conducted by Kelton Research between July 29th and August 5th, 2009 using Random Digit Dialing of listed and unlisted numbers. Quotas are set to ensure reliable and accurate representation of the total U.S. population ages 18 and over. Results of any sample are subject to sampling variation. The magnitude of the variation is measurable and is affected by the number of interviews and the level of the percentages expressing the results. In this particular study, the chances are 95 in 100 that a survey result does not vary, plus or minus, by more than 3.1 percentage points from the result that would be obtained if interviews had been conducted with all persons in the universe represented by the sample.

About Charles Schwab

The Charles Schwab Corporation (Nasdaq:SCHW) is a leading provider of financial services, with more than 300 offices and 7.6 million client brokerage accounts, 1.5 million corporate retirement plan participants, 619,000 banking accounts, and $1.3 trillion in client assets. Through its operating subsidiaries, the company provides a full range of securities brokerage, banking, money management and financial advisory services to individual investors and independent investment advisors. Its broker-dealer subsidiary, Charles Schwab & Co., Inc. (member SIPC, http://www.sipc.org), and affiliates offer a complete range of investment services and products including an extensive selection of mutual funds; financial planning and investment advice; retirement plan and equity compensation plan services; referrals to independent fee-based investment advisors; and custodial, operational and trading support for independent, fee-based investment advisors through its Advisor Services division. The Charles Schwab Bank (member FDIC) provides banking and mortgage services and products. More information is available at www.schwab.com. (0809-10663)

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Pablo Rodriguez, 415-486-3267
pablo.rodriguez@edelman.com
Jennifer McClellan, 212-704-4567
jennifer.mcclellan@edelman.com

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