Planning for retirement is only slightly higher on the groan scale than dieting or starting a workout routine, according to findings from a survey of 1,000 Americans released April 1, 2008.
Whether it’s financial or physical fitness, it’s tough getting started.
Only one in three people surveyed is on track with retirement planning, and about one-fourth haven’t started planning at all. Nearly one-third view retirement planning as slightly more difficult than starting a workout regimen (29 percent) or a diet (28 percent).
“Many individuals don’t know where to begin or how much they need to save,” observed Jeffrey Carney, president, Bank of America Retirement and Global Wealth & Investment Management Client Solutions, in a press release.
Obstacles to retirement planning for many Americans, the survey found, include the following:
- Difficulty knowing what types of investments they should make, 42 percent.
- How much they will need to retire comfortably, 40 percent.
- When to retire, 33 percent.
- Where to begin in the planning process, 32 percent.
It’s not that Americans are unfamiliar with retirement products. An overwhelming majority (79 percent) know about 401(k) plans, for example—but less than one-fourth (22 percent) contribute to a 401(k).
More than two-thirds (68 percent) know about Individual Retirement Accounts (IRAs), although only 40 percent have one. Fewer know about Roth IRAs—an employee benefit employers were able to add as of January 2006—the survey found.
Still, just as with a fitness plan, education is key when it comes to making financial choices for retirement.
A free new tool from the U.S. Department of Labor that contains interactive worksheets helps give people a better idea of how much they need to save to realize their retirement goals. Free copies of the accompanying booklet are available by calling the Employee Benefits Security Administration toll free at 866-444-3272 or going online and clicking “publications.”
“Americans clearly need guidance and education regarding how much of their pre-tax income they will need to maintain a similar lifestyle in retirement,” Bank of America’s retirement products group executive Dan McNamara said in a press release.
Among the 1,000 people surveyed by phone in March 2008 for Bank of America, 250 were people with investable assets between $100,000 and $3 million. However, about one-third of that group are finding it difficult to identify appropriate retirement investments, and around one-fourth aren’t sure how much money they’ll need.
Even though affluent Americans are more likely to have an IRA than the general population, they’re no more likely to fund it every year, and three-fourths have not changed the amount they allocate to their retirement investments, the survey found. Instead, more than half of affluent Americans surveyed are changing their spending habits, including spending less on travel and vacations (48 percent) and shopping less (45 percent).
“Our survey confirms that consumer spending is tightening, contributing to the country’s economic downturn,” Bank of America economist and retirement strategist Lynn Reaser said in a press release.
Although the survey didn’t appear to address it, health spending likely is having an impact. As HR News reported in September 2007, the Employee Benefit Research Institute found that 45 percent of U.S. workers have decreased their contributions to other savings.
Kathy Gurchiek is associate editor for HR News. She can be reached at email@example.com.