Americans are also somewhat pessimistic about other critical topics, including long term care arrangements and the cost of other health care. According to the study, fully 53% of adults have not started making financial arrangements for retirement, and four in 10 respondents stated not having saved enough for retirement is their biggest financial regret.
“Preparing ourselves financially for future aging and care needs is one of the biggest issues Americans are facing today,” says Tom McInerney, president and CEO of Genworth. “Competing financial obligations, lack of information and even fear prevent many from making a plan simply because they don’t know how to approach retirement planning and take the first step.”
Of respondents who have started making retirement arrangements, the average age is 33, Genworth finds. Respondents also report average annual retirement savings of $7,360—but Genworth researchers warn the more informative median saving figure is a mere $500.
When asked about the amount of money they will need to retire, adults said they anticipated needing, on average, $1.7 million for retirement. At the current average annual savings rate, a 33-year-old would only have approximately half a million dollars at age 65, assuming a 4% compound interest rate.
Genworth finds a major component of retirement planning that tends to be overlooked by Americans is the potential need for long term care. According to Genworth researchers, as many as seven in 10 Americans will require some form of long term care before their death.
According to Genworth, Americans can take several easy steps for their financial and families’ well-being. The survey reveals few people have created a will, designated guardians or set advanced medical directives. “These three, little-to-no-cost actions can be added to a financial checklist that spans every stage of life,” the researchers note. “It is increasingly more important to develop good habits earlier in the retirement planning process, even though life changes and aging tend to be the impetus for many to start planning for their aging and retirement needs.”
Genworth encourages plan sponsors and advisers to download the full Generational Planning Study from its website. The underlying survey research was conducted in collaboration with J&K Solutions LLC and The Olinger Group, via an online survey of 1,000 U.S. adults from across the U.S., during February 2015.