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Without guidance, many will fall short of their financial goals
Generation X Americans tend to be more concerned that they will not have enough money for retirement than younger and older generations, according to a new retirement study by LIMRA, a research and consulting firm.
Only a quarter of Generation Y consumers (ages 18 to 32) and three in 10 Baby Boomers (ages 49-68) are very concerned about having enough money for retirement, compared with 36 percent of Generation X consumers.
“While many Gen X Americans are in the prime earning years, they are less likely to have a defined benefit plan than Boomers and more likely to be aware of risks associated with retirement and the challenges they face to save enough to achieve a secure retirement than younger consumers,” explained Alison Salka, corporate vice president and director of LIMRA Retirement Research. “They also may be managing multiple financial demands, like saving for a child’s education or helping older parents. Meanwhile, Baby Boomers probably already have a realistic picture on their retirement outlook.”
Fewer than 20 percent of all Americans are very confident they will have a secure retirement. Boomers and members of Generation X are least likely to feel very confident about achieving a secure retirement (13 percent and 14 percent, respectively). However, 21 percent of Generation Y said they are very confident they will have a secure retirement.
The July 2013 study asked consumers to define “retirement security.” The top three descriptions chosen were as follows:
Almost three-quarters of respondents reported that they have taken at least one step toward a secure retirement. Contributing to an employer-sponsored retirement savings plans was the most common practice among full-time workers. As expected, workers over age 55 were more likely to have taken more steps, including calculating their retirement income, working with a financial-planning consultant and determining what their retirement expenses will be.
Lack of Financial Knowledge
As for Americans’ financial acumen, only half claim to be somewhat or very knowledgeable about investments and financial products. Women, younger Americans and lower-income Americans scored themselves lower than their counterparts.
“In our most recent study, six in 10 women felt they had little or no knowledge of financial products and investments, compared with four in 10 men,” Salka said. “Interestingly, though, women and men had similar average scores on a financial-literacy quiz LIMRA offered earlier this year. Research has shown that women control or play an important role in most households’ financial decisions. In addition, many will likely live longer in retirement; yet they still don’t believe they have the knowledge they need.”
Nearly half of Americans (more likely men and those with higher incomes) said they acquired their financial knowledge by educating themselves.
“The good news is, Americans are interested in learning more about various financial topics,” Salka noted. The study found that:
These statistics increased for Generation Y consumers.
“Retirement readiness is in the news these days, but without the knowledge or guidance to help them make appropriate choices, consumers are likely to fall short of their financial goals,” said Salka. “The industry can take advantage of this appetite for knowledge by implementing financial-literacy programs to help consumers learn how to budget, get out of debt, save and plan for retirement. This will benefit not only the industry but the nation as a whole.”
The findings are based on a nationally representative survey of 2,032 Americans.
Related SHRM Article:
Recently Retired Left Workforce Earlier than Planned,
SHRM Online Benefits, September 2013
SHRM Online Retirement Plans Resource Page
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