Countless studies have demonstrated that individuals who diligently plan for their retirement are better off financially, and feel more confident about their retirement prospects, than those who don’t. As the saying goes, “people don’t plan to fail; they fail to plan.”
So a key finding of a new study from Hearts & Wallets LLC should come as little surprise: That Americans who establish target goals, a key component of planning, save nearly two-thirds as much as those without goals — $4,619 in mean savings dollars as compared to $2,764.
The survey, which polled 5,400 households, also reveals that goals that inspire the highest levels of savings are: (1) “stop work all together” with more than $6,500 mean savings dollars; and (2) “pay for someone else’s college” with more than $6,000 mean savings dollars.
The report adds that financial negligence among non-planners extends to an “aversion” to discuss intergenerational financial issues. Yet, the report notes, financial interdependence between generations is growing.
Among the survey’s additional findings:
- One in five pre- and post-retirees provide financial support to their children, and 12 percent of late-career accumulators provide financial support to their parents, statistics that are both up slightly from 2012.
- Most older individuals (55 percent) do not believe they will receive full Social Security benefits.
- A growing number of older households (23 percent) agree with the statement, “if I run out of money in old age my children will take care of me,” up from 21 percent in 2012.
- The average American household uses 6.5 sources of advice, up from 4.5 sources in 2011. Family is the third highest financial information and advice source nationally at 59 percent, ranking only slightly behind financial professionals at 64 percent.
- Early career (28 to 39 years) investors are the most enthusiastic users of information and advice sources, with three professional sources and five other sources.
- People starting out in their careers are increasing their use of financial professionals, up to 64 percent from 60 percent in 2013. And they are increasing their use of paid professionals, jumping to 48 percent from 39 percent.