A 2018 Northwestern Mutual Planning & Progress Study has found that financial security in retirement is a key issue for many Americans.
Think Advisor’s recent article,“1 in 3 Americans Have Less Than $5,000 in Retirement Savings,” reports that almost 80% of all Americans are “extremely” or “somewhat” concerned about affording a comfortable retirement, while 66% think that there’s some likelihood of outliving their retirement savings.
The study showed that these fears are substantiated. Roughly one in three Americans have fewer than $5,000 in retirement savings. The study also found that 20% have no retirement savings whatsoever. One in three baby boomers surveyed had fewer than $25,000.
In addition, 75% say it’s “not at all likely” or only “somewhat likely” that Social Security will be around when they retire. Nonetheless, 46% of adults have taken no action to prepare for the likelihood they could outlive their savings.
“As financial implications of retirement become increasingly complex, inertia just isn’t an option,” said Rebekah Barsch, vice president of planning for Northwestern Mutual. “The good news is that it’s rarely too late to start. In fact, we often compare financial and physical fitness because the hardest part is taking the first step. However, once people commit to a strategy and start seeing positive results, they’re motivated to meet and even exceed their goals.”
The study also finds that these concerns about financial security in retirement may be causing some individuals to work longer. The research found that more working Americans say they will retire at 70 or older (38%), than in the more traditional 65-to-69 age range (33%).
Of the 55% of Americans who think they’ll have to work past age 65 out of necessity, 73% cited “not enough money to retire comfortably” as the dominant reason. Other reasons listed were Social Security not being enough to take care of their needs (61%) and concerns over rising costs like healthcare (52%).
“Continuing to work later in life should be a personal choice, not a mandatory requirement for survival,” Barsch said in a statement. “Proactive financial planning can be the difference between a desired and a default retirement lifestyle.”
The 2018 study is based on an online survey of more than 2,000 U.S. adults conducted in March 2018 (and an oversample of 601 interviews with millennials age 18-34). Data were weighted to be representative of the U.S. population, based on census targets for education, age, gender, race/ethnicity, region and household income.
Reference: Think Advisor (May 8, 2018) “1 in 3 Americans Have Less Than $5,000 in Retirement Savings”