The Sixth Annual Retirement Fitness Survey, conducted by Wells Fargo and Company, has revealed that nearly three out of every four working, middle-class Americans (72 percent) between the ages of 25 to 69 expect to work through their retirement years. Reasons for this response included a deep deficit in personal retirement savings and a lifestyle choice. Survey respondents answered that they have saved less than seven percent of their desired retirement nest egg.
The survey found that the median in retirement savings for those ages 50 to 59 was only $29,000. For an expected 20 years of retirement, this results in only $190 per month. However, 56 percent of respondents said they were “confident or very confident” that they will be able to financially support their lifestyle through retirement. For all the age groups surveyed, $300,000 was the median amount predicted to be needed for a proper retirement nest egg. But the median savings of these respondents was only $20,000, expecting to spend 10 percent of their retirement nest egg annually. However, the industry recommendation is to withdraw no more than four percent annually.
“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 and Trust. “People are not even close to where they need to be in total savings. 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.”
While all groups surveyed, even the younger demographics, seemed to understand the importance of retirement saving and planning, 65 percent of those surveyed believe they should be saving more and could do so if they had more guidance. The survey results show that the 40s age group was under the most financial stress due to economic strains causing household tensions. They were also less likely to have pensions like their older colleagues and 80 percent expect to need to work through retirement.
Only 54 percent of the 60-somethings age group felt they would have to work through retirement. This age group, along with the 50-somethings, was the most excited about retirement, most confident in Social Security benefits, and most likely to expect pensions as a source of retirement income. Over half of the respondents in the 60s age group, at 59 percent, and the respondents in the 50s age group, at 55 percent, had pensions. Comparatively, only 36 percent of the 40-somethings and 32 percent of the 30-somethings had pensions.
The majority of respondents expressed a strong support for retirement reform to help with additional saving, with 79 percent saying they would like their employers to offer more advice to help manage their retirement. Unfortunately, this guidance is currently difficult for employers to provide due to regulations. Only 33 percent of those surveyed have a written, detailed plan for their retirement.
Written by Kelly Mellott