Although most Americans appear to recognize the importance of planning for their financial future, too many people are still not taking the necessary steps for ensuring a comfortable and secure retirement. Just look at the new Prudential Investments survey which asked 1,568 U.S. adults to list their top financial priorities at the moment. The most common responses were saving for retirement (49 percent), having enough money to maintain a certain lifestyle throughout retirement (47 percent), and not running out of money in retirement (36 percent). An alarming 54 percent of surveyed pre-retirees, though, said that they have “no idea” how much money they will need to actually set aside for old age. As for the respondents who did report that they know how much money will be needed for retirement, the group was largely split between whether more than $1 million in savings will be required to cover their probable expenses.
Thirty-five percent of surveyed pre-retirees expressed doubts that they will ever be able to save enough for retirement and therefore concluded (wrongly) that it does not matter when they start setting money aside. One reason for this apparent pessimism is that 57 percent of pre-retirees said that they believe saving for retirement will be more difficult for them than it was for older generations. When asked why, popular responses included rising healthcare costs (48 percent) and potential changes to Social Security benefits (43 percent). Surveyed Millennials (ages 21-34) who said that “saving for retirement” is one of their top financial priorities were found to have the most confidence in their ability to set aside enough money to cover their old-age outlays. That is not too surprising since these young adults still have several decades left to get their personal finances in order. However, only 38 percent of Gen Y respondents said that they are currently enrolled in an employer-sponsored retirement plan, and nearly a fifth reported that they have yet to even start saving for retirement.
Among all respondents, 46 percent said that they wish they had started setting money aside earlier. Saving, though, is just one aspect of ensuring an ideal retirement outcome, and perhaps even more important is properly investing those funds. Unfortunately, more than half (59 percent) of surveyed Americans described themselves as “not experienced” investors, and nearly two-thirds (64 percent) said that they feel overwhelmed by the number of financial products they must choose from. Fifty-two percent also reported that they worry “quite often” about their investments’ sensitivity to stock market volatility but 53 percent said that they simply do not have enough time to be actively involved in the day-to-day management of their investments. For these individuals, working with a professional financial advisor could be very beneficial, especially since the respondents who did say that they regularly consult with an expert reported a lot more confidence in their ability to achieve their retirement savings goals.
Sources: Prudential InvestmentsPost author: Charles Couch