If makes anyone feel better, affluent Americans aren’t very good at saving either. Investopedia, the online dictionary of financial terms (or fictionary) found that saving for retirement is a “significant challenge,” with 52 percent of respondents to a recent survey report they feel behind on their target savings, with many expressing concerns they’ll be unable to retire on time.
The Investopedia study also revealed a direct correlation between a person’s level of financial knowledge and their confidence in their retirement savings plan. Fifty-eight percent of “novice investors” feel they are currently behind on their savings, while “expert investors” are seven times more likely to be ahead of their goals.
Surprisingly, respondents who self-identified as being behind, on track and ahead all use employee-sponsored retirement plans at the same rate. Additionally, 78 percent of those who feel they are behind currently contribute to an employee-sponsored plan, indicating that saving through a 401k or 403b is not enough to stay on track.
“That more than half of Americans with above-average savings feel that they have inadequate savings is a nationwide problem that needs to be addressed,” Investopedia CEO David Siegel said in a statement. “These concerns coming from investors will only be magnified when looking at the general population.”
Retirement is repeatedly cited as the top financial concern, he noted, and yet “it’s clear they’re still not receiving the necessary tools and advice to succeed.”
Echoing many in the 401k advice industry, Siegel added that the first step to alleviating this burden and getting people on track is education, arguing that financial literacy “is not just an individual issue but one that impacts a country’s economy, and we urge schools, communities and government organizations to make it a top priority.”
Nearly four out of five investors participate in some form of retirement plan though only 18 percent receive professional advice. Only 10 percent of those surveyed feel they are ahead in their retirement savings.
Contributing to an individual retirement account is the biggest differentiating factor for those who feel ahead of schedule. Eighty-two percent of ahead-of-schedule respondents indicated contributing to an IRA. Twenty-eight percent of respondents agreed that they were on track. The remaining 10 percent of respondents stated they were unsure about the status of their retirement savings.
The level of income for respondents does not appear to be a driving force behind saving. Investors who say they are ahead have more than five times the investable assets of those who feel behind while earning less than two times the average income.
The study also revealed specific strategies and concerns about Americans’ retirement savings:
- 38 percent of respondents feel they are on track or ahead of schedule
- 82 percent of investors who feel ahead on their savings contribute to an individual retirement account (IRA), compared to 57 percent (on-track) and 33 percent (behind)
- 60 percent of respondents aged 50+ are worried that something may delay their retirement – with healthcare costs as the top concern
- 82 percent of respondents receive no retirement advice from a financial professional
- 81 percent of millennials do not have confidence that Social Security will be available when they reach retirement age