Write it down.
Stephen Covey and parents everywhere might be a bit upset that Schwab is stealing their shtick.
The company recently took a look at habits that lead to successful retirement saving, and putting a plan in writing came up big.
In fact, 54 percent of participants with a written plan increased their 401k contributions in the past year, compared with only 33 percent of those without a written plan.
Fully half of those with a written plan have rebalanced their 401k portfolio, while only 24 percent of those without a plan did.
“Those who put pen to paper with written financial plans are more confident, more engaged with their wealth and demonstrate more positive saving and investing behaviors than average Americans,” according to Schwab.
The findings are part of the San Francisco-based company’s Modern Wealth Index, something it introduced in June “to help track how well Americans across the wealth spectrum are planning, managing and engaging with their wealth.”
The Index, which Schwab says is grounded in its Investing Principles, assesses Americans across four factors: 1) goal setting and financial planning, 2) saving and investing, 3) staying on track, and 4) confidence in reaching financial goals.
On a scale of 1-100, Americans received an average Modern Wealth Index score of 49.
Not surprising, and reflecting an “all talk, no action” mindset, Americans score highest when it comes to confidence in reaching their goals, while the actions it takes to stay on track—such as checking account balances and rebalancing investments—was the largest drag on the overall index score.
However, those written plans scored above the national overall index average of 49 with a score of 79. They also score above the national average across all four sub factors of the index:
- Goal setting and financial planning: 100
- Saving and investing: 67
- Staying on track: 46
- Confidence in reaching financial goals: 100
Sadly, Schwab’s survey found just 24 percent of Americans say they have a financial plan in writing.
“We know planning is one of the most fundamental factors of successful investing,” Terri Kallsen, executive vice president and head of Schwab Investor Services, said in a statement. “But there is a clear need to make planning and professional advice more accessible and engaging for people, because not enough Americans have written financial plans. It’s one of the most important issues for our industry to address today.”
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
