This post is from staff writer Jeffrey Steele.
The Employee Benefit Research Institute’s 2013 Retirement Confidence Survey was released in mid-March, and reinforced the notion that within many sober reports on serious personal finance subjects, we can find a few good laughs.
In short, one will come away from perusing this survey with more than just a bonanza of solid information. Also lying in wait for the reader is the periodic giggle, the oft-heard chortle, and the occasional good raucous guffaw.
All of these result from reading about the retirement philosophies and actions of Americans, a group that includes many people who, hamstrung by lack of formal education in personal finance, sustain their bewilderment by sidestepping every chance to learn more about and master sound money management disciplines.
Having earlier been tipped to one finding of the report, that something like 57 percent of people in the country had saved less than $25, 000 for retirement, I wasn’t surprised by some of the details revealed in the EBRI survey.
Those tidbits included the fact that Americans’ confidence in their ability to comfortably retire is at an all-time low; that many cite specific percentages of income they must save to retire comfortably, but haven’t bothered to investigate how much they actually will need; and that some Americans spend good money on financial advisors, and then ignore those advisors’ suggestions.
Is it any wonder that many Baby Boomers expect to be shuffling off to work well into their 80s (but as the report reveals, probably won’t be able to)?
With no further ado, let’s enjoy some yucks.
Waking up to reality
The survey acknowledges that despite the steadily brightening economic climate, many workers’ own states of retirement confidence have darkened. That’s likely because they’re finally dialing in to just how much they will need to save. Thirty-three percent of workers polled said they figured they would need to save 20 percent or less of household income, 20 percent said they’d need to save 20 to 29 percent and 23 percent figure they’ll need to save 30 percent or more.
Here’s the part of the report that caught my eye:
“Those who say they are not confident about their financial prospects in retirement are more likely to say they do not know how much they need to save.”
So in addition to being down about fact their retirements may be impoverished, these folks have made themselves more morose by not clicking on any one of the 10.2 million results that appear on Google when the words “retirement-planning calculators” are entered.
Delaying retirement planning
One of the more amusing findings of the report had to do with when respondents started planning for retirement. If up to me, I’d mandate starting in their junior year of high school, while taking an obligatory personal finance class. But since that’s not very common, the report asked retirees when during their adulthood they began to plan. An admirable 34 percent said 20 years or more, and another 32 percent said they initiated planning 10 to 19 years before they retired.
“However, ” the report remarks, “19 percent said they did not start planning until five to nine years before retirement, and 12 percent started less than five years before that point.” The factoid I loved was that two percent of retirees polled starting planning for their retirements – are you ready? – the very year they retired!
I think these were some of the same people who do their taxes on April 15th, start their holiday shopping at all-night pharmacies on Christmas Eve, and cracked open their first course book in a class the evening before final exams.
Following investment advice
Approximately a quarter of both the workers and the retirees responding to the survey reported they had paid for investment advice from a financial advisor.
Last time, I checked, such advice wasn’t offered for low rates; in fact, the folks dispensing it often make a very good living. So those accessing the advice likely had to pony up some significant dollars. Despite this, 23 percent of workers and 28 percent of retirees in the survey reported obtaining financial advice. Yet only 27 percent of workers said they followed all the advice, and almost a third of workers said they followed only some of the advice, or none of it.
This would be akin to hiring a lawn service, and then when the crew shows up with state-of-the-art lawn tractors, shoving them out of the way and using a non-motorized push lawn mower to mow the lawn yourself.
And we’re supposed to be shocked they are downbeat about retirement prospects?
A final note
Want to quickly understand why retirement may be difficult for many Americans?
The survey divulged that only two percent of workers and four percent of retirees view retirement planning as the most pressing financial issue facing Americans today. Compare that to the 60 percent of workers and nearly 40 percent of retirees identifying their current debt load as a problem, and we get a sense of priorities out of whack.
We as Americans have to do a better job of planning ahead for our post-work years. If we don’t, the result isn’t going to be funny.