A full three-quarters, 75%, of Americans are only “somewhat confident” or “not confident at all” that they will be financially prepared for retirement, according to Fidelity Investments’ Retirement Mindset Study. By comparison, 62% are confident about their current financial health, and 65% say they are more confident now than they were a year ago.
Fidelity says that the reason why people are uncertain about their retirement future is primarily because they lack a plan. While many say they have thought about it, only 18% have a comprehensive, written plan for their retirement.
Asked why they do not have a plan, 23% say they never thought about it, 22% say they do not know where to begin, and 20% say they feel like they are too far behind to make a difference.
The lack of a plan cuts across all generations, with 79% of Boomers without a written financial plan for retirement, and 87% of Millennials and 81% of Generation X saying the same.
Fidelity says the best place to start is with small steps: “We know many people feel overwhelmed by the prospect of creating a plan for retirement,” says Melissa Ridolfi, vice president of college and retirement leadership at Fidelity. “The good news is you don’t have to be a great planner or take giant leaps to get started. Whether you’re a Millennial or a Boomer, or think of yourself as a planner or not, the small steps you take today can lead to a greater sense of confidence about your retirement years. It’s never too early or too late to get started.”
Fidelity asked those who have a written plan what prompted them to form one. Thirty percent say they just decided to create one, and 25% say it was because they wanted to gain control over their finances.
Asked what financial roadblocks they feared they would face in the future, 38% say rising health care costs/long-term care costs, and 28% point to Social Security benefits. Asked what they might have to compromise on with regards to their lifestyle in retirement, the most common answer was having to downsize their home, followed by living on a fixed income, and outliving their assets.
Among those who have a plan, 49% say it makes them feel more in control, 43% suggest it makes them feel good about themselves and 30% say it makes them feel relieved. Only 10% say they are still stressed about retirement.
Fidelity’s findings are based on an online survey of 1,429 adults that Brookmark Research Services conducted in February and March.
Meanwhile, an Intuit survey echoes some of the Fidelity survey findings, with 78% of Americans feeling that prosperity is currently out of reach. At the same time, 80% foresee financial success in their future and 58% think they will achieve prosperity over time.
Seventy-eight percent are delaying personal milestones, such as purchasing a home (30%), retiring (22%), starting a family (22%) starting a business (19%) or getting married (19%). Fifty-five percent do not feel confident in their ability to manage their finances, 45% say they are living paycheck to paycheck, 44% have no savings, 36% say they are burdened with debt, and 19% say they are unable to fully support themselves.
Fifty-eight percent say the economy is preventing them from achieving a prosperous life, and 46% point to demographic factors, such as ethnicity, gender and sexual orientation.
Intuit conducted its online survey of 3,163 adults in February.