It’s Halloween, so what better time to share some scary retirement planning facts that should make you scream?
Consumers are expected to spend $8.8 billion to celebrate Halloween, with the even more expensive holiday season on deck. Many people are not in a great financial position to be spending large amounts of “discretionary” income on the holidays, but that of course won’t stop them.
Meanwhile, their 401k accounts (if they have them) continue to put on a scary face created by missing contributions.
So, culled from a couple of recent studies, here is a Halloween 2020 edition of Scary Facts about Retirement Planning.
Saving for retirement: A dream or a nightmare?
Spooky Stat: 58% of retirement plan participants say they aren’t saving enough to be on track, according to the 2019 Lincoln Financial Retirement Power Participant Study.
Lincoln Financial says advisors can help them conquer that fear by offering a plan that encourages them to set a savings goal. Per the aforementioned study, people who set a specific retirement savings goal are three times more likely to contribute 15% or more and are more likely to be confident.
Are participants battling too many undead financial priorities?
Another Spooky Stat: 86% of retirement plan participants currently have debt, and 63% of them say their debt is a problem. Lincoln Financial says plan sponsors can help them conquer that fear by offering financial wellness tools and encouraging employees to meet with Retirement Consultants to maximize their retirement plans.
10 spooky facts about retirement
While Halloween evokes images of ghosts, goblins and creepy clowns, what’s more scary to consider are these 10 facts the Secure Retirement Institute (formerly LIMRA SRI) gathered about retirement:
- 1 in 7 U.S. retirees (ages 65+) live in poverty.
- 44% of workers who aren’t saving for retirement say they cannot afford to.
- Over half (53%) of Americans don’t believe their savings and investments will last if they live to be 90 years old.
- 30% of retirees have mortgage debt—almost double from 1989.
- About 80% of older adults have at least one chronic disease, and 68% have at least two.
- Social Security is the primary source of income for retirees but the Social Security Trust Fund is expected to be depleted in 15 years.
- Less than half of workers (44%) believe that income from Social Security, pensions and annuities will be enough to pay for their basic living expenses in retirement.
- 45% of working Baby Boomers have less than $100,000 saved for retirement—28% have less than $25,000.
- Only 13% of Americans say they are very knowledgeable about financial products and investments.
- 7 in 10 pre-retirees say they aren’t well prepared for their retirement.
78 million equate their financial situation to a horror show
78 million Americans say their finances have reached “horror show” status, including 34% of Millennials and 16% of Baby Boomers, according to a new WalletHub Financial Fears Survey.
“It’s startling to see that nearly 80 million Americans would go so far as to say their finances have reached ‘horror show’ status, says WalletHub CEO Odysseas Papadimitriou. “But it shouldn’t be too surprising. For one thing, people have never been more inclined to use hyperbole. Financial literacy levels are also far too low. And more importantly, a lot of people are indeed struggling financially right now.”
He notes that consumers currently owe more than $1 trillion to credit card companies. “That’s expensive debt, and if we don’t start to pay it down in a meaningful way, the horror show will get a lot worse, unfortunately.”