Many Americans Are Unprepared For Retirement, Survey Finds

in Financial Planning by

KEY POINTS
  • The median amount saved for retirement in American 401ks stands at only $18,433.
  • 30% of Americans rely on financial advice from family to save for retirement.
  • 40% of Americans with a retirement savings account don’t know what they pay in fees.

It’s no secret that a retirement crisis is catching up to folks across America. In a transition from pension to 401k plans, retirement has become the number one financial concern for US adults. Making matters worse, the median amount saved in 401k accounts across the country is just $18,433.

That’s why we launched our Retirement Planner this summer, to help Americans of every age prepare for retirement. On the heels of Retirement Planner’s release, we conducted a Harris poll*, to see how Americans really feel as they approach retirement.

Here are the top 10 retirement trends we uncovered:

1. Americans trust family over financial advisors

30% of Americans rely on family for financial advice, over advice from a professional financial advisor (sought by 27%). Only 8% of Americans get advice from a broker.

2. Online tools are making waves

20% of Americans planning for retirement have used online planning tools to forecast their total savings at retirement age. That means 80% of people still have yet to take advantage of the many online financial planning tools on the market.

3. Retirement creates anxiety

Over half (51%) of US adults feel overwhelmed when they think about the amount of money they need to save for retirement. A meager 15% of people report that they feel somewhere between “somewhat comfortable” and “very comfortable” when they evaluate what they’ll need to retire.

4. People don’t know what they need

86% of American adults planning for retirement aren’t sure how much money they need to save, and only 18% have met with a financial advisor.

5. Most Americans feel unprepared

The majority (55%) of Americans feel unprepared for retirement; 24% feel somewhat prepared; and just 8% feel very financially prepared for retirement.

6. There is a savings shortage

The #1 reason Americans feel unprepared for retirement is they lack savings (reported by 25% of people). The #2 reason Americans feel unprepared to retire is that retirement savings take a back seat to other financial priorities, and folks aren’t sure how much money they’ll need in retirement (reported by 22% of people).

7. Cost of living takes priority

For 28% of Americans, cost of living outweighs health care (14%), age (12%), and social security (4%) as the most important factor when planning for retirement.

8. Fees are leaving folks confused

Nearly 40% of Americans who have a retirement savings account are not aware of how much they pay each year in account fees.

9. The masses are saving millions

Nearly 40% of people believe they will need to save $1 million or more for retirement.
Screen Shot 2015-08-03 at 2.47.11 PM Originally printed in USA TODAY.

10. Market volatility fuels unpreparedness

The majority (60%) of US adults are unprepared for a bear market, noting that they haven’t taken precautionary steps for a potential economic downturn.

While our survey reveals that many Americans aren’t aware of how much money they need to save to retire or if they’ll be ready when the time comes, people are in fact still saving. We collected Personal Capital user data and found out exactly how much folks are tucking away every month. According to our data, older users save more on an absolute basis, but users in their 20’s and 30’s save a higher percentage of their total assets than those in their 40’s, 50’s and 60’s (as you can see below).

Screen Shot 2015-07-16 at 2.53.58 PM

Since Retirement Planner’s launch this June, nearly 30,000 people have already used it to find out if their saving and investing plans will add up to a happy retirement.

Want a full demo to see how Retirement Planner can help you prepare for financial security in your golden years? Check it out here.

*This survey was conducted online within the United States by Harris Poll on behalf of Personal Capital from May 26-28, 2015 among 2,026 adults ages 18 and older, among which 1,577 are not currently retired and 909 are not currently retired but have begun planning for retirement. This online survey is not based on a probability sample and therefore no estimate of theoretical sampling error can be calculated.

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Marianne Ahlmann

Marianne Ahlmann

Marianne is Communications and Content Manager at Personal Capital.

One Response

  1. Eric Black

    Marianne, Could you please clarify the Personal Capital user data? The average monthly savings for a person in their 50’s is $4,169 or $50,028/year. This average monthly savings is .14% of assets. So the average assets are 4149/.0014 or approximately $3 million? The Personal Capital’s Retirement Planner is a great tool, but its users are apparently not representative of the average American saver. Thanks, Eric

    Reply

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