There’s a disconnect between how people feel about their current financial health and their level of confidence about their future financial health in retirement.
According to a new Fidelity study, when asked how much confidence people have in being financially prepared for retirement, 75% report feeling only “somewhat confident” to “not confident at all,” compared to a majority who feel confident about their current financial health—and 65% who are more confident today than they were this time last year.
With all this confidence about their current financial health, why the uncertainty about retirement, the Boston-based investment behemoth wants to know?
The answer, it says, may be a lack of planning.
“While we know creating a plan for retirement can lead to a sense of confidence and control, and ultimately give people a clearer picture of where they stand for their retirement, the study suggests that a surprising percentage of the general population haven’t even considered doing so,” Fidelity writes.
In fact, while many say they’ve “thought about it”, only 18% have created a comprehensive written plan for their retirement. Of those who say they have not created a written retirement plan; the No. 1 reason is “I’ve never thought of having to prepare a plan” followed by “I don’t know where to begin.”
Generational issue
This lack of planning cuts across generations: three out of four boomers don’t have a written financial plan for retirement, which is alarming given this generation is closest to retiring, if they haven’t retired already.
Yet, boomers are not alone, as the majority of those belonging to other generations–millennials and generation X–also haven’t created such a plan.
“We know many people feel overwhelmed by the prospect of creating a plan for retirement. The good news is you don’t have to be a great planner or take giant leaps to get started,” Melissa Ridolfi, vice president of college and retirement leadership at Fidelity Investments, said in a statement. “Whether you’re a millennial or a boomer, or think of yourself as a planner or not, the small steps you take today can lead to a greater sense of confidence about your retirement years. It’s never too early or too late to get started.”
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.