Consumers are prioritizing long-term planning over short-term financial concerns, a study released Tuesday by Northwestern Mutual found. However, while they say long-term planning is important, many aren’t taking steps to implement an actual plan.
“People’s priorities are in place, but are their good intentions backed by demonstrable action?” Greg Oberland, Northwestern Mutual executive vice president, asked in a statement. “On one hand, we’re seeing strong evidence that people are saving more. On the other, we know that half of all Americans have no long-term plan in place, and nearly a quarter are taking on more risk than they would prefer because they feel the need to play catch-up.”
The report asked respondents about the most important financial decisions they’ve made or will make in their lives, and found that despite age differences, consumers have similar priorities. For respondents over 55, 40% said saving early was one of the best decisions they made, and 27% said their best decision was investing heavily in their 401(k). Younger respondents agreed. Over half said starting to save early was the best decision they could make and 25% cited relying heavily on their 401(k). Nearly 30% of boomers and 20% of respondents between 25 and 54 said getting real estate at a good price was their best decision.
“Interestingly, there’s consistency across generations with Americans valuing the importance of saving, paying off debt and managing risk,” Oberland said. “We often say that people can’t expect to invest their way to prosperity, but rather see investing as one component of a larger holistic plan. This data indicates that’s a message that is resonating.”