It’s not surprising that individuals in their 40s and 50s feel better prepared for retirement than those in their 20s and 30s. After all, they’ve had more time to save and think about retirement. But it doesn’t explain why one in three American’s in their 60s feel unprepared.
The Wells Fargo Retirement Fitness Study (PDF) conducted in 2010 points to a broad gap in attitudes and expectations about savings and retirement between those in their 20s and 30s vs. those over 40. The study was conducted to better understand the impact that the current economic environment has had on middle class Americans ranging in age from their mid-20s to their late 60s. Below are interesting highlights by age group:
- 20-somethings are the least confident about investing in the stock market, and are most likely to put their savings in a bank CD rather than invest in stocks.
- 40-somethings are under the most financial stress of any age group. They are dramatically less likely to have pensions than older workers, and economic strains are most likely to be causing tension in their households. 80% of them expect to work through retirement, versus 54% of 60-somethings.
- 50-somethings rely heavily on pensions to fund their retirement (2nd only to 60-somethings) and most still have faith in Social Security. They are more aggressive savers (closest age group to meeting their savings goal), have less debt (15% have no debt), and more investable assets (four in ten have $100,000 or more).
- 60-somethings told us that 1 in 3 do not feel prepared for retirement. Four in 10 do not know how much money they will need to retire (this was the highest of any age group). Many will fully retire (44%) but a third will need to continue working for financial reasons (33%).
So why do a third of pre-retirees in their 60s feel unprepared? For many, recent volatility in the financial markets has taken a toll on both investment values and investor confidence. With less time to make up market losses, this can create real concerns for investors in this age group. Coupled with lower home values, interest rates at or near all time lows, and inflationary pressure from continually rising healthcare and fuel costs, the result can be daunting for those already in or near retirement. It’s enough to make anyone freeze with indecision but that’s exactly what you can’t afford to do.
At Wells Fargo we understand that saving, investment and retirement planning needs vary greatly by age and life stage. That’s why Beyond Today focuses a considerable amount of content on life stage planning. Our Ages and Stages tab on this website provides a broad range of ideas, educational content and tools to help you better understand the retirement risk factors you face at any age and offers practical guidance to help you remain on track toward your goals.
No matter what your age, I encourage you to take a look at Ages and Stages and then let us know if you found this information helpful in planning your retirement journey.