In a glaring example of why 401k financial wellness programs are so important—and why 401k advisors need a laser like focus on retirement outcomes—over 80 percent of Americans say they have no idea how much money they’ll need retirement
Bank of America Merrill Lynch, along with research and consulting firm Age Wave, found that half of respondents consider finance topics too taboo to discuss openly. Furthermore, financial decisions are the most second-guessed of any major life decisions.
“This study underscores that thriving in retirement requires looking through the interconnected lenses of all major life priorities–family, health, home, work, leisure, giving and finances–and anticipating how you want to live, what matters most to you, and the trade-offs you can make today to more generously fund your future self,” Ken Dychtwald, CEO and founder of Age Wave, said in a statement. “Although we are all challenged to fund our longer lives, this suite of studies has repeatedly revealed that Americans remain quite hopeful and are willing to consider a wide range of course corrections in order to enjoy a secure retirement.”
While most people say they want to live to the age of 90, only 27 percent of pre-retirees age 50 and over feel financially prepared to fund a retirement that lasts 10 years, let alone 20 or 30 years. Americans are also saving only a fraction of what they think they should: 5.5 percent vs. 25 percent of their annual income (after taxes).
As for younger investors, more than half of millennials feel a secure retirement is beyond reach, compared to 30 percent of baby boomers who feel this way. And millennials expect 65 percent of their retirement income to come from personal sources, including savings and continued employment, far more than earlier generations.
The survey found the three biggest retirement-related financial worries for most Americans are :
- A costly health issue impacting them or loved ones;
- Inflation – the rising cost of life; and
- Not having enough money to do what they would like.
People say the cost of basic expenses and prioritizing paying down debt are the two biggest barriers to saving more for retirement. And, not surprisingly, they are far more concerned about “their” personal economy than “the” economy.
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.
