As it becomes harder and harder for middle class Americans to meet their monthly financial obligations, funding their retirement is becoming less and less of a priority; a trend that will lead to Americans working longer, which could have widespread social and economic implications for the country.
In its third annual Middle Class Retirement study, Wells Fargo found that more than half of the middle class survey respondents (59 percent) ranked their top day-to-day financial concern as paying their monthly bills, up from 52 percent the previous year. While middle class Americans struggle to meet their immediate financial obligations, saving for retirement becomes obscured.
Survey respondents ranked saving for retirement a distant second place with 13 percent calling it a priority. Priority or not, it is simply not possible for many Americans to save and meet their current financial commitments. Forty-two percent of Americans said that paying the bills and saving for retirement was not possible, which translates into 48 percent of survey respondents reporting that they are not confident they will be able to save enough for a comfortable retirement and the 34 percent that said they will work until they are “at least 80.”
Although it appears to be a struggle, roughly half (52 percent) of the middle class between 25 and 75 report that they are confident they will have saved enough to be able to retire. Interestingly, less than 30 percent of that group have a written retirement plan — a tool that financial professionals view as necessary for healthy retirement saving evident by the fact that 70 percent of those with a plan describe themselves as confident while just 44 percent without a plan feel that way.
Middle class Americans in their 30s are more aware of what it takes to have a successful retirement than Americans in their prime retirement saving years (those between 40 and 59). The reasons for this are unclear, however, it may have to do with the fact that younger people are aware of the volatility surrounding the Social Security system or have witnessed sloppy retirement planning by their older colleagues and are looking to avoid making those same mistakes. Thirty-one percent of middle class Americans between 40 and 59 have a retirement plan in place while 34 percent of those in their 30s have one.