More households than ever (35%) in
the past seven years “want to stop working/retire at a certain age,”
analyses by Hearts & Wallets find.
After a several year trend
of a majority wanting to work as long as health permits, that number
dropped to less (45%) this past year. Hearts & Wallets speculates
that the increase in the desire to stop work is a reflection of a
greater control of their ability to work due to the "gig" economy.
in four U.S. households has at least one partner employed in the gig
economy, rising to four in 10 for older workers. Seventy percent of
workers, and even higher percentages of older workers, say alternative
employment is by choice, the analyses find.
Participation in an
employer-sponsored retirement plan (ESRP) is one way to prepare to stop
work, Hearts & Wallets notes. Yet even as eligible household
participation remains at above 80%, the portion of savings going into
these plans continue to decline. The analyses find the average rate of
savings was 39% in 2014 and has declined to 35% in 2016. The savings
rate is not impacted as much by age, as average household participating
in an ESRP devotes about one-third of savings to the plan, a figure
steady across life stages. Participation is highest among those ages 40
to 52, the life stage with the highest percentage of savings devoted to
Looking more comprehensively at U.S. retirement readiness,
about six in 10 households expect to use personal assets for retirement
income. Most are underfunded using traditional wealth measures.
portion of U.S. households saving 4% or more rose to nearly half (48%),
driven by the less than $100,000 wealth group last year. Still one in
four households saved nothing at all or spent more than income, and one
in four mid-life and post-retirement households are not adding to
savings. Only one in four households saved over 10% of income.
analyses find real estate plays a vital role in household wealth and
has potential to be incorporated into financial advice and guidance
experiences. For households with less than $500,000 in investable
assets, real estate represents more than half of assets. Even for
wealthier households, real estate still averages one-quarter to
one-third of total assets.
“Households may be in better shape for
retirement than anticipated using a broader view of household wealth,
but much work needs to be done in partnership with financial services to
prepare and support Americans going forward on their choices, from
employment, saving, spending to investments,” says Laura Varas, CEO and
founder of Hearts & Wallets.
The reports, “Income & Net
Wealth” and “Retirement & Funding,” are drawn from the section of
the Hearts & Wallets Investor Quantitative Database analyzing the
behaviors and attitudes of more than 5,000 IQ Database households. More
information is at www.heartsandwallets.com.