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Gallup: Income, age key in retirement funding expectations

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CHARLESTON, WV -

Although tens of thousands of West Virginians will rely on Social Security in retirement, those who are not retired have different expectations.

Gallup's annual economy and personal finance poll, conducted April 4-14 and released May 20, found that nonretired American's expectations about which sources will fund their retirement differ significantly by their annual household income. Upper-income retirees are much more likely to say investments, such as 401(k), IRA and other retirement savings accounts or individual stock investments and work-sponsored pension plans, will be a major source of retirement income. However, lower-income respondents said Social Security and part-time work would be their major sources.

Gallup sampled more than 2,000 adults, including 1,300 nonretirees.

Gallup found that 65 percent of upper-income Americans expect a retirement account, such as a 401(k) or IRA to be a major source of retirement funds. That figure drops to 44 percent of middle-income respondents and 26 percent of lower-income respondents.

However, 42 percent of lower-income Americans say Social Security will be a major source of their retirement funds, compared to 17 percent of upper-income nonretirees. And age could be a factor.

According to Gallup, younger people are more likely to say they would depend on a retirement account rather than Social Security. However, older generations of workers reported a greater expected reliance on the program.

"Gallup has found that only about one-in-five young adults expect to receive a Social Security benefit when they retire," Gallup reported in the findings. "And even if they do receive a benefit, potential reforms to Social Security may require today's younger workers to wait until a later age to get full benefits or to get a proportionately smaller benefit than today's retirees. Thus, young respondents are looking to sources outside of Social Security to support them after they stop working."

According to Tom Hunter, associate state director of AARP West Virginia, more than 300,000 West Virginians are members of the organization. AARP has advocated in favor of maintaining Social Security.

"While a lifetime of work and saving is reflected in higher net worth, older Americans still have a lower income and struggle with higher out-of-pocket health care and utility costs," Hunter said. "Certainly, the economic turmoil of the last several years has taken its toll on Americans of all ages, particularly the nearly 232,000 retirees in the Mountain State who depend upon the important benefits Social Security provides.  

"AARP wants to help people understand retirement as a life transition, visualize their goals and take the steps needed to build retirement security," Hunter added. "Our members understand better than most the critical importance of planning for retirement security and strengthening Medicare and Social Security to ensure health coverage and a modest income for retirees of all generations."

For those nearing retirement age, Social Security and self-directed retirement accounts play an equal role in funding retirement, Gallup found.