More attempts at a retirement wake-up call for consumersLifeHealthPro Blog added by Brian Anderson on January 21, 2011
Brian Anderson

Brian Anderson

Joined: September 17, 2010

My Company


If you are interested in statistics about the retirement readiness — or lack thereof — of consumers, I have a couple of studies you may want to peruse.

Earlier this week, Mintel released a study showing 45-54-year-olds are taking longer to come out of the recent recession, as 47 percent of that group (versus 33 percent overall) say they “have only been spending on necessities” for at least a year. And 51 percent of this age demographic (versus 44 percent overall) say they intend to permanently decrease the amount of unnecessary “stuff” they will buy in the future. Finally, about four in 10 say they worry more about retirement now than they ever have.

The report goes on to say the recession has apparently had a positive effect on savings habits for those under age 45. Forty-four percent of those aged 18-24 and 34 percent of those in the 35-44 age range say they intend to permanently increase the amount of money they save (versus 28 percent overall). Some are backing it up with actions — about 10 percent of 18-44-year-olds have actually increased the amount they are saving in their retirement accounts in the last year.

“We continue to see numbers indicating that the recession was a wake-up call across age groups, just in different ways,” said Susan Menke, vice president and behavioral economist at Mintel. “Everyone is more concerned about having adequate funds to retire after this recession. Unlike the baby boomers, however, younger age groups are able to do something about it, which offers a potential opportunity for financial services firms.”

Back in December, Wells Fargo released a study saying the average American has saved less than 7 percent of their desired retirement nest egg, and respondents aged 50-59 have saved an average of only $29,000 for retirement.

I’ve said it before and I’ll say it again: Yikes.

This study goes on to say that middle-class Americans (defined here as those aged 30-69 with $40,000 to $100,000 in household income or $25,000 to $100,000 in investable assets and those aged 25-29 with income or investable assets of $25,000 to $100,000) think they need $300,000 to fund their retirement but, on average, have only saved $20,000.

“Consequently, more than a third of respondents believe they will have to work during retirement in order to afford the things they want or just to make ends meet.”

Just one-third? Apparently, about another third of respondents are living in a dream world far from the scary retirement reality world that should be staring them squarely in the face.

“Too many Americans have their heads in the sand in the face of obvious savings deficits,” said Laurie Nordquist, director of Wells Fargo Institutional Retirement Trust. “Barring a miracle, a winning lottery ticket or a big inheritance, they’re going to be forced to dramatically cut back their lifestyles after retirement.”

The vast majority of respondents admitted they need help figuring out how much money they need to live on in retirement and picking investments for their 401(k)s. But in a negative twist for financial advisers, more than two-thirds said they were not willing to pay for this advice.

Guess that last conclusion shouldn’t be too surprising, given the track record of these respondents.
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