Posted on 25 June 2008
By Mark Miller
Think you know what you’re doing when it comes to planning your retirement income? Odds are, you don’t, if the Metlife Retirement Income IQ Test is any indication. The company’s annual study of pre-retirees reinforces just how little most of us know about retirement planning. Metlife asked pre-retirees to take a simple 15-question quiz. The worrisome results: seven in ten pre-retirees have a very poor understanding of how much they can draw down their savings in retirement while still preserving principal. The survey found that 69 percent think they can withdraw 10 percent or more each year without affecting principal – even though most experts suggest a guideline figure of 4 percent. The study also shows major gaps in understanding of average life expectancy and other retirement income issues.
On average, test-takers scored 43 on a scale of 100 points–a grade Metlife said reflected a “basic” retirement income knowledge. “While we would have liked to have seen more dramatic increases in the scores, directionally Americans are improving their retirement income IQs,” said Sandra Timmermann, director of the Metlife Mature Market Institute. “Yet, there are still far too many misconceptions about retirement income issues. Most concerning is the fact that so many pre-retirees overestimate how much they can spend down from their retirement savings annually. This statistic should serve as a wake-up call for pre-retirees and advisors alike.”
See how you match up by taking the quiz yourself here.