A lot of Americans don’t feel good about their financial security, and they are particularly vulnerable when it comes to preparing for retirement. Three recent surveys show the depth of the problem and highlight the need for better financial planning.
A survey commissioned by New York Life found that more than half of adults aged 30 and above feel that they are financially “under-protected” when they consider their savings, emergency funds and life insurance coverage. Nineteen percent say they are “severely under-protected,” while only 46 percent say they feel adequately protected. Among parents with at least one child under age 18, only 36 percent say they are financially protected.
From the prospective of small business owners, some 75 percent say that Americans are so unprepared for retirement that it has reached “crisis levels,” according to a survey by Nationwide Financial. Yet only 19 percent say they offer their employees a 401(k) plan and only 11 percent say they plan to offer 401(k)s within the next two years. At the same time, 78 percent of the small business owners say offering a retirement plan would help them recruit and keep qualified employees. The most recently cited reasons for not offering a plan: the business is too small and administering the plan would be too expensive.
Finally, a survey by Franklin Templeton Investments found that 31 percent of Americans say their biggest concern in retirement is “running out of money.” Other top concerns include: health care expenses (27 percent) and changes that would reduce or delay Social Security benefits (15 percent). Of workers aged 35-44, 41 percent have invested in an employee-sponsored retirement plan; only 23 percent say they currently work with a financial advisor. Of those between age 18 and 24, 25 percent say they plan to rely on Social Security as their primary means of support during retirement. Three-quarters of people ages 65 or older say they are more concerned about the volatility of investments than they were prior to the 2008 recession.
Insurance and financial advisors are key to making sure Americans don’t fall further behind financially and to turning the situation around. When it comes to life insurance, studies have shown that people prefer to buy and are more likely to buy when they work with a professional agent. For middle-market investors, NAIFA members, in particular, serve an important role providing financial advice and services. And this service pays off: A report by consulting firm Aon Hewitt found 401(k) investors who sought investing advice saw annual returns nearly 3% higher than those who invested without advice.
See also:
USA Today: "Many Have Little to No Savings as Retirement Looms"
