Almost 40 Percent of Non-Retirees Have Given No thought to Retirement Planning: Federal Reserve

Economic Well-Being

Brutal …the new “Report on the Economic Well-Being of U.S. Households in 2014” released in May from the Federal Reserve is depressingly familiar in what it reveals.

“Many individuals report that they are not planning for retirement and not saving for retirement. Additionally, even among those who are saving, respondents indicate that they lack confidence in their ability to manage their retirement investments,” according to the Fed.

As the economy of the United States continues to rebound from the Great Recession, the well-being of households and consumers provides important information about the scope and pace of the economic recovery. In order to monitor the financial and economic status of American consumers, the Federal Reserve Board began conducting the “Survey of Household Economics and Decision-Making” in 2013 and conducted the survey for a second time in October 2014. The findings from the October 2014 survey are covered in the latest report. Topics examined in the survey include the financial health of individuals on a number of levels, such as overall well-being, housing, economic fragility, savings and spending, access to credit, education and student loans and retirement planning.

Key Findings

Overall, since the previous survey in 2013, individuals and their families experienced only mild improvements in their overall well-being, but they are increasingly optimistic about the trajectory of their well-being going forward.

The survey also asks questions about a number of specific aspects of individuals’ financial lives:

Housing

Most renters express a preference for homeownership. Homeowners are generally optimistic about the trajectory of their home values. However, many renters, and especially lower-income renters, indicate that financial barriers to homeownership prevent them from purchasing a home.

Economic Fragility

Although the survey finds that economic hardships are common, many individuals are ill-prepared for a financial disruption and would struggle to cover emergency expenses.

Just under one-quarter of respondents indicate that they or a family member living with them experienced some form of financial hardship in the year prior to the survey.

Savings and Spending

Most respondents report that they saved at least some of their income in the past year, although a sizeable minority indicate that their spending exceeds their income.

Banking and Credit

A majority of individuals believe that credit is available to them should they desire it. However, a sizeable minority of those who applied for credit report that they experienced difficulties getting approved.

Education and Student Loans

The perceived value of a postsecondary education varies widely depending on program completion, type, and major. In addition, respondents who fail to complete a degree are disproportionately likely to fall behind on their student loan payments.

Retirement

Many individuals report that they are not planning for retirement and not saving for retirement. Additionally, even among those who are saving, respondents indicate that they lack confidence in their ability to manage their retirement investments.

Differences in Well-Being by Household Income Level

Across a range of dimensions, individuals in lower-income households express a higher frequency of financial challenges. These lower-income respondents are less prepared for financial hardship, less likely to be saving, and more likely to expect to never stop working.

See Also:

Exit mobile version