Citizens in these Cities Say They Are Ready for Retirement - You Won't Believe
NEW YORK ( MainStreet) Americans are feeling pretty good about their prospects for retirement, but where this newly found confidence is coming from may be a bit of a mystery. Still, more than two in five (42%) say they are financially on track for life after work, according to an annual retirement readiness report released today by Ameriprise Financial.
The research examined the 30 largest U.S. metro areas to determine where consumers say they are the most prepared for and confident about retirement. San Francisco-Oakland-San Jose ranked #1 in retirement readiness.
The runner-up? Detroit. Say what?
It's true. The report says Detroit area residents are much more likely than average Americans (56% vs. 48%) to have contributed to personal retirement accounts, other than employer-sponsored accounts. They were also significantly more likely than their peers in other metro areas to have a written financial plan (17% vs. 11%) and to work with a financial advisor (38% vs. 29%).
"Detroit has climbed steadily on the index since 2010 when the metro was number 21, though this is by far the greatest improvement Detroit has made," says Suzanna de Baca, vice president of wealth strategies at Ameriprise Financial. "Though we don't know for certain what is motivating Detroit locals to increase their preparation for retirement, the same factors that are helping to restore the American economy as a whole, such as improvements in the auto sector and rising home values, may also be at work in Detroit."
Workers in Orlando (#30), Los Angeles (#29) and Nashville (#28) ranked as the least retirement-ready.
One in five Americans (19%) say they feel "very prepared financially" for retirement, and nearly three in four (72%) say they have taken some action to prepare for retirement. Fully 51% report contributing to a 401(k) or other retirement plan and nearly half (49%) of respondents say their retirement account balances have recovered from the market downturn in 2008 and 2009.
While saving for a retirement income is the highest priority for U.S. workers, nearly half (45%) say that covering healthcare expenses will be one of the most challenging financial issues after they leave the workforce.
Americans estimate needing a median of $100,000 in savings to help pay for healthcare costs not covered by Medicare. This is close to what retired individuals spent on average over the course of their retirement ($135,500 according to 2012 EBRI data), but far less than the $227,000 the Employee Benefit Research Institute predicts individuals will spend on healthcare during retirement in 2020.
One in ten (10%) survey respondents expect family and friends to care for them in retirement if their health begins to fail.