How do we ensure we don’t run out of money before we run out of life? With the prospect of longer lifespans, 38 percent of workers say it would be a financial “hardship” to live past the age of 85, according to a new 2018 Wells Fargo Retirement study.
Most workers say they expect to live to age 85, 42 percent say they could live longer, and 10 percent say they could live to 95 or older.
Although a longer-than-expected life raises the possibility of financial struggle, retirement in and of itself represents a life event that most survey respondents look forward to, with 90 percent saying that retirement will be a “positive new chapter in life.”
“Americans strive for a good retirement and view it optimistically,” Fredrik Axsater, head of Strategic Business Segments at Wells Fargo Asset Management, said in a statement. “People expect a retirement that could last 20 to 35 years, and our survey represents a call to action to help them prepare for this new stage in their lives, remove fear, and provide more certainty of their financial future. There is a strong likelihood that retirees will live longer than they expect.”
Wells Fargo uncovered four specific statements that, when affirmed by workers, correlate with a significantly better financial life, including lower levels of financial stress and better financial well-being.
These are:
- Setting a financial goal during the past six months.
- Working toward a long-term goal.
- Feeling good about planning financial matters over the next one to two years.
- Preferring to save for retirement now rather than waiting until later.
Workers with the planning mindset:
- Are more likely to have a “thriving” financial life (64 percent versus 36 percent for those without a planning mindset) or a” thriving” life overall (79 percent versus 58 percent).
- 42 percent are less likely to have high levels of financial stress.
- Have 3.1 times more retirement savings than someone without a planning mindset.
Working men with the planning mindset have saved more for retirement than those without a planning mindset ($150,000 versus $60,000).
Working women with the planning mindset also have saved more than those without a planning mindset ($75,000 versus $30,000).
Across all workers, 84 percent of those with a planning mindset say they regularly contribute to retirement savings versus 66 percent who do not have this mindset.
And fewer people with the planning mindset — 27 percent — envision living to age 85 or longer as a financial hardship versus 43 percent who do not have this mindset.
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.
