Of the 1,046 mass affluent Americans (individuals with $50,000 to $250,000 in investable assets) surveyed for Bank of America’s latest Merrill Edge Report, more than half (51%) did not save for retirement at all in 2014. Only half (50%) of respondents said they are “content” with the financial decisions they made.
“Many mass affluent Americans feel they didn’t do enough this year to put themselves in a good place for the financial future they desire,” says Aron Levine, head of preferred banking and Merrill Edge at Bank of America Corporation. “The good news is investors of all ages are rethinking their priorities and plan to make retirement a top goal in 2015.”
Nearly six out of 10 (59%) respondents say they are making retirement savings and investing a goal for the upcoming year. This is a more popular goal than losing weight, which was cited by 42% of respondents.
Feelings of guilt over not investing outpaced other year-end regrets including poor eating and drinking choices, not sharing enough time with loved ones, or spending too much money. However, when asked about the role finances play in their day-to-day decisions, respondents revealed these other daily choices merit more of their attention.
While long-term finances are taken into consideration by most respondents when conducting routine financial activities such as paying bills (73%) and receiving extra funds (66%), less than half (47%) make the same connection between daily purchases such as groceries and their long-term financial goals.
Most do not believe other spending activities will impact their long-term financial goals, instead believing that spending on entertainment (33%), eating at restaurants (37%) and paying for gas (38%) makes a difference for their goals.
The study also found a distinction between Millennials and older generations. Millennials are the most focused on their investments, with 33% reporting that among a number of other common tasks, they spend the most time each week on their investments. In comparison, only 20% of Gen Xers and 17% of Baby Boomers report the same. Importantly, 40% of Gen Xers say budgeting is a top focus among common financial activities, and 40% of Baby Boomers cite the grocery list.
“Millennials, in particular, feel they are held back from investing and saving enough for retirement because of debts from unpaid student loans,” Levine says.
The survey found that 75% of Millennials have student debt, and 46% admit to putting off retirement savings and investing until they have paid off outstanding student loans. However, more than half (51%) of Millennials were able to pay down their debt in 2014.
Levine says, "With some uncertainty still surrounding the economy and the job market, the younger generation is taking matters into their own hands by making investing and saving a top priority."