Last week we learned about ways to achieve a comfortable standard of living in old-age. Many Americans, though, remain understandably discouraged by their current lack of savings and some even fear that an ideal retirement is no longer in reach. For example, a new Allianz survey found that nearly half (49 percent) of active savers aged 45 to 65 feel they are struggling to set money aside for old age and worry their savings may never get on the right track.
The report defined such individuals as “Chasers,” and more than eight in ten believe they have fallen behind on setting money aside for retirement. Around the same percentage are concerned that if they do not boost their rate of saving sometime in the near future then it will be impossible for them to enjoy their dream retirement. Two-thirds of Chasers also worry that they will run out of money in old age, and 61 percent already expect they will be forced to delay retirement and keep working in order to shore up their financial situation.
Chasers’ gloomy outlooks are likely exacerbated by their age, i.e. nearness to retirement and perceived lack of time to make significant improvements, but other financial hurdles exist as well. The vast majority (98 percent) of Chasers, for instance, said that they wish there was “a way they could accumulate funds faster to make up for lost time,” but more than half (54 percent) reported that they have “too many other expenses right now,” and 20 percent said that they are currently saving for “other financial priorities.”
A popular way to amass a large retirement nest egg is to utilize a tax-advantaged savings vehicle but only 53 percent of Chasers said that they have a 401(k) or IRA. Further, participation in the stock market can help grow one’s savings but just 35 percent of Chasers said they own individual stocks or mutual funds, and only 14 percent have annuities. Nearly two-thirds (63 percent) of Chasers also said that they are not comfortable with high- risk/high-reward financial products, and 84 percent of Chasers are instead interested in investments that offer growth potential with some protection from loss.
An aversion to risk can be a good thing but a lack of understanding about investing can sometimes result in people being overly risk-averse. Allianz’s Paul Kelash stressed that “Chasers will likely need to be more aggressive in order to catch up on their retirement savings goals,” but added that “working with a financial professional can help Chasers understand how they could take on more risk, yet still have protection in their portfolio.” Only 39 percent of Chasers, though, reported that they are currently working with a financial advisor, compared to 53 percent for highly-confident retirement savers.
Post author: Charles Couch