Not much of a surprise here, but it’s always good to reinforce—Americans need to save more on their own for retirement, but human nature suggests they will focus more on day-to-day financial needs.
Analysis of a recent survey from the Center for Retirement Research at Boston College, titled “Are Americans of All Ages and Income Levels Shortsighted About Their Finances?” confirms that a household’s level of financial satisfaction is tied more to short-term–rather than long-term–concerns.
Even households that are in reasonable shape in the short term do not seem to focus more on distant concerns like retirement saving. And households that are more financially literate appear only modestly more attuned to long-term financial issues.
The study finds that a household’s financial satisfaction is intensely present-minded. It is highly correlated with day-to-day financial conditions, with much more muted relationships to distant concerns. Nor does this basic relationship change much if the household’s day-to-day finances are in reasonable shape or if the individual making the assessment is financially literate.
“Thus households, by themselves, cannot be expected to devote much effort to addressing long-term saving goals,” the paper concludes. “These results suggest a need to reduce reliance on individual decision-making by making it both easy and automatic for individuals to save.”
See Also:
- ‘Retirement Risk’ Down for American Households, But …
- Morningstar Set To Kick-Off Annual Chicago Investment Confab
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.
