Sluggish wage growth and relatively high unemployment have put many Americans in a defensive financial posture and made it more difficult to meet short-term spending needs, according to the COUNTRY Financial Security Index survey. The research shows nearly four in 10 (38%) workers over age 40 say they regret decisions they’ve made with respect to retirement savings, namely not starting to save early enough to ensure positive outcomes.
Of the 25% of Americans who aren’t saving at all, nearly half (46%) say it’s not possible for a typical middle-income family to save for a secure retirement. This is two points higher than this time last year and the most to say this since March 2011.
“It’s a real wake-up call to see that so many Americans are not putting money towards their nest egg and are, in turn, generally concerned about retirement prospects,” says Troy Frerichs, director of wealth management at COUNTRY Financial. “Our advice to those Americans who haven’t begun saving, and to those who have, is save early and save often.”
Making retirement savings a priority early in life is a critical step in achieving long-term financial security and avoiding what appears to be the coming retirement crisis, he adds.
Other survey results show even Americans who already save for retirement may not be taking the proper steps to set themselves up for success in their golden years. For example, of the 45% who do regularly contribute to a 401(k), nearly one-third do not know where their contributions are invested. Additionally, 29% of U.S. workers say a 401(k) is the primary way they are saving. However, most lack a diversified retirement portfolio, as just 17% say they are using at least two different savings vehicles in their 401(k).
The silver lining here, researchers say, is that about four in 10 Americans check the health of their retirement savings at least every few months, suggesting interest is building in retirement planning.
“It’s great that Americans are consistently checking the health of their retirement savings, but you have to do more than just look. Knowing where your money is going and how to diversify your savings so you are set up well for your golden years is crucial,” Frerichs says.
Despite having more time to prepare, respondents in their 20s and 30s are the most pessimistic about their retirement prospects, according to the survey results. About one in three workers between ages 18 to 29 say they are not saving for retirement, more than any other age group.
More adults ages 30 to 39 say it’s not possible for a typical middle-income family to save for a secure retirement than any other age group (47%), and of the 44% of workers under age 29 who utilize a 401(k), 39% say they do not know where their contributions are invested.
More information is available at the COUNTRY Financial blog.