GRAND RAPIDS — Nearly two-thirds of Americans don’t think they’ve saved enough thus far or are not currently saving enough for retirement, and more than one-third believe that at the rate they are going, they may never be able to retire at all, according to a new survey by Scottrade, a discount, online investment firm.
The majority of Americans are “largely unprepared” for retirement, the survey revealed. Overall, 62 percent of Americans polled said they have not saved enough, while 71 percent of respondents ages 35 to 44 said they have not saved enough.
Some 56 percent of the 1,000 people polled indicated that their No. 1 financial concern was saving for retirement. Among other potential concerns: 47 percent worried about having enough money for health care-related costs; 44 percent were concerned about financially protecting family members in case of premature death or disability; 31 percent expressed concern about their future ability to afford education expenses, and 30 percent worried about their ability to care for elderly parents and relatives.
According to Scottrade’s 2007 American Retirement Study, which was conducted in February, adults 34 and under generally had more financial concerns than their older counterparts. More than half of people in that age group said they were “extremely” or “very concerned” with juggling daily expenses, covering unexpected major expenses and accumulating too much debt. Some 59 percent of 25- to 34-year-olds and 40 percent of 18- to 24-year olds indicated they were already concerned about having enough for retirement.
It seems counterintuitive that younger people are that concerned, since younger people are typically thought of as carefree, said Chris Moloney, Scottrade’s chief marketing officer.
“In this study the youth are anything but carefree,” he remarked. “The 25- to 34-year-old crowd is especially angst-filled over their overall finances. It’s good that people are concerned about retirement at a young age, but the problem is the research shows they’re not doing much about it — they say they just can’t get ahead, and they’re just trying to pay their bills.”
Respondents younger than age 45 were more likely than those over 45 to say they want to have $2 million set aside by the time they retire. But the survey indicates that they’re off to a slow start in meeting that goal. About half of Americans ages 18 to 44 have saved less than $25,000, the report notes. In addition, one in five Americans is not sure just how much he should have saved by the time he retires.
“The good news is that people are raising the issue of retirement as their most commonly listed concern,” Moloney said. “So there’s a great deal of awareness surrounding it, but the awareness is not translating into action.”
Of Americans ages 55 to 64, one in four said they didn’t know how much they presently have in retirement savings. Twenty-nine percent of people in that age group say they’d like to have between $500,000 and $2 million tucked away by the time they retire, but a mere 16 percent have that much money saved to date, the survey shows.
Maloney said his company was really surprised at the high percentage of Americans who are not adequately prepared for retirement. The research shows they have a high level of expectation about how much they’re going to have when they retire, but very few have been saving at a pace that would deliver that amount, he pointed out.
“The disparity between what people feel they should have and what they actually have saved could spell a potential retirement crisis,” Moloney said. “There just seems to be an obstacle where people are more concerned with the day-to-day stuff. These findings should be a wake-up call for many Americans. You can’t start saving soon enough.”
On the upside, the survey indicates that 90 percent of Americans are getting serious and actively working to improve their financial status and retirement outlook by pursuing the following measures:
- 65 percent are spending less.
- 55 percent are paying down debts.
- 49 percent are cutting back on credit card usage.
- 45 percent are saving more.
- 30 percent are working more hours to earn more.
- 25 percent are seeking higher paying jobs.
Scottrade is delving deeper into the survey data to try to figure out why people are having problems saving. The company is also mining the data to gather respondents’ views on Social Security and on the types of retirement accounts they use.
The current retirement study revealed that 48 percent of respondents rely on a 401(k) as part of their retirement plans, 39 percent use savings accounts, and 33 percent have an Individual Retirement Account, a Simplified Employee Pension IRA or similar retirement savings plan.
Scottrade conducted the retirement study for the first time this year. Being a discount and online brokerage, the company doesn’t provide advice to customers, but it does provide information and research, Moloney pointed out.
He said Scottrade believes the use of IRAs is underrepresented in the marketplace, he explained. As a provider of IRAs, the company knows that IRAs are not as widely used as would be expected. Scottrade decided to conduct the survey to understand Americans’ views toward retirement planning, the role IRAs play, how apt Americans are to set money aside for retirement and why they might not be setting money aside, Moloney said.
“We wanted to understand where the drawback is. Where is the ball being dropped, and how could we support and educate people about investing and saving for their future?”