Lots of numbers and information to cull from the latest Wells Fargo Affluent Retirement Survey, but the short version is this—Americans are feeling better about their retirement prospects, or at least “mass affluent” Americans, that is.
The survey, done in conjunction with Harris Interactive, found that while an overwhelming majority (88%) of affluent Americans “feel confident” they will have saved enough for the life they want in retirement, far fewer Americans with less than $250,000 in investable assets (57%) have confidence in their retirement savings.
“What is striking about the ‘affluent’ is that their overwhelming confidence is not from guessing what they’ll need, but from disciplined saving, watching their spending and detailed planning,” Karen Wimbish, director of Retail Retirement at Wells Fargo, said in a statement.
Almost three quarters (71%) of the affluent have a written plan for their finances in retirement compared to only 43% of those with less than $250,000 in assets. While a majority of the affluent takes a methodical approach to retirement planning, a majority (73%) of Americans with less than $250,000 in assets “guess” the percentage of their current household income needed to support them in retirement.
Further evidence of the confidence among affluent Americans is that a strong majority (61%) say they have “no financial fears” concerning their retirement because they are confident in their planning and preparation, which is about twice the level of those (32%) with less than $250,000 in assets. Conversely, one third (33%) of the affluent “fear doing all the right things today but it still won’t be enough” for retirement compared to half (52%) of those Americans with less than $250,000 in assets. Moreover, while one-quarter (24%) of affluent Americans say they need to significantly cut back spending today in order to save enough for their retirement, half (50%) of those with less than $250,000 in assets indicate they will need to cut back spending.
A quarter (27%) of the affluent cite healthcare costs as their primary day-to-day financial concern as compared with 16% of those with less than $250,000, who instead say “paying the bills” is their primary concern (43%). The affluent estimate out-of-pocket healthcare expenses in retirement at $60,000 and those with less than $250,000 estimate $49,000.
“Although the affluent are more financially prepared for their retirement, both groups have grossly underestimated the healthcare expenses they will need in retirement,” said Wimbish. “They need to be more aware and plan for the real costs of healthcare in retirement.”
Working in retirement due to financial necessity will be a reality for a third (34%) of Americans with less than $250,000 in assets, compared to only 9% of the affluent, the survey found.