Data & Research January 10, 2017

Retirement Confidence Lies in Closing Behavioral Gaps

A new study suggests 78% of Americans are stressed about their financial future regardless of income, but they can reverse this trend by exhibiting specific behaviors.
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Although the majority of Americans believe preparing for retirement is important, a new study by The Guardian Life Insurance Company of America suggests that most lack adequate savings and long-term financial plans.   

The firm’s study of financial and emotional confidence found that nearly 60% of Americans prioritize having at least one source of guaranteed income in retirement outside of Social Security benefits. However, less than one in four report feeling very confident in any aspect of their retirement finances. Moreover, the survey found 52% of respondents said building savings is a major priority, but more than two-thirds say they don’t describe themselves as living within their means. Forty-seven percent prioritized having a solid, long-term plan for achieving financial goals, but 81% don’t feel that they have one.  

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Overall, 78% of working American families are stressed and worried about their financial future, regardless of age, gender, income or other demographics, Guardian notes.  

Based on these and other findings, Guardian created a Financial Confidence Quiz. This assessment places participants into a set financial-confidence segment based on their answers to finance-related questions. It also offers tips on how to change behaviors in order to take hold of their financial lives and improve their future.

The segments were identified as follows.

  • Day-to-Day Decision-Maker: Generally stressed and struggling with finances – In the study this segment included the highest proportion of women and Gen X;
  • Ambitious Spender: Stressed but coping – Small business owners comprised a large segment of this category in the study;
  • Retirement Realist: Fearful of the future, with an above-average emphasis on savings and having adequate retirement income;
  • Confident Planner: Very positive on work/life balance. Study participants in this segment placed an above-average emphasis on retiring with a secure income, and making good investment decisions, leading to a higher degree of overall life satisfaction than the other segments.

NEXT: Behaviors that can increase retirement confidence

    Through the study, Guardian elicited a pattern of behaviors exhibited by Confident Planners or just 21% of respondents. These individuals are most likely to credit their success to four specific behaviors:  

    • Education: The Confident Planners have higher levels of education as well as financial competence, as measured by an assertion of basic understanding of financial concepts and products.
    • Plan: These individuals are more likely to live within their means and have some form of a written plan with specific details and clearly outlined objectives.
    • Ownership: Most own products appropriate for their financial goals that incorporate both growth and protection solutions.
    • Partnership: The majority work closely with an adviser and use some type of planning tool.

    “Making a few small changes in how you approach your finances can put you on track to be more financially confident and ultimately help you live a more satisfied, less-stressed life,” suggests Matthew Bryan, assistant vice president at Guardian.

    He concludes, “The happiest and least-stressed Americans are the most financially literate, are more likely to have a detailed plan, and own appropriate products to financially protect their families. Advisers can help by taking a holistic approach that identifies the gaps in their clients’ current behaviors and then laying out a blueprint to address those gaps for a more financially confident future that models the behaviors of the most confident Americans.”

    Guardian conducted a national online survey of 4,971 Americans age 18 and older who are currently employed full-time or part-time, have never retired, and have household incomes of $50,000 or more.

    For more information about The Guardian Study of Financial and Emotional Confidence, visit guardianlife.com. Guardian’s Financial Confidence Quiz can be accessed here.

    Client Service January 10, 2017

    Recent Retirees Still See Room for Optimism

    Survey data shared by Spectrem Group shows “overwhelming satisfaction” among both recent and long-term retirees with respect to their personal and financial lives after work; many could have sought advice earlier.
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    A new Spectrem Group analysis that examines the attitudes, behaviors and concerns of recent retirees—out of the workforce less than a decade—and those retired for 20 years or more, reveals overwhelming satisfaction with life in retirement.

    “A whopping eight out of ten U.S. retirees find life in retirement better than they had originally anticipated,” the firm reports. “At the same time, however, the report shows that many retirees failed to begin planning until just five years before they left the workforce, with nearly a quarter acknowledging that it wasn’t until the year they retired that they started planning for life after work.”

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    The failure to plan and seek advice almost certainly means many workers are achieving sub-optimal outcomes during the period leading up to and transitioning into retirement. In fact, the quantitative portion of the study indicates that only half of retirees sought any professional advice for their retirement planning, with nearly a third indicating that the reason they didn’t was that “in their opinion professional retirement planning services cost more than the value delivered.”

    “Once retired, the lion’s share of retirees’ monthly income comes from pensions and Social Security, which together comprise 58% of monthly cash flow among those surveyed,” researchers explain. Nearly seven in ten retirees said they use a financial adviser to help manage these responsibilities.

    While retirees share common everyday concerns about budgeting and spending, the single greatest challenge they expressed was in managing and dealing with medical care, a concern shared by one in four (25%) retirees.

    NEXT: Retirees hold out some optimism

    Other key findings show about four in 10 retirees claim Social Security benefits at age 62, the earliest age one is eligible to receive the benefit.

    “Just 27% of retirees previously worked for companies with a workplace financial wellness program that educated them about retirement, Social Security, insurance and other matters relevant to planning for retirement,” the research finds. “Fully a quarter of retirees continue to have a mortgage on their primary residence, and almost four in ten have a mortgage or loan on a second home. The longer an investor has been in retirement, the more likely they are to have mortgages or loans on their property.”

    While the vast majority (89%) of retirees have a will, only about half (54%) have an estate plan. Those with children are more likely to have an estate plan than childless retirees.

    “The good news is that most retirees are in the enviable position to pursue new interests, step back from the day-to-day stresses of life, and spend more time with their family,” concludes Spectrem President George H. Walper, Jr. “However, ensuring sufficient income in retirement requires advanced planning. Our research has found that retirees who receive help from an adviser in planning for retirement often appreciate the fact that a plan is in place, and are reassured that their assets will likely outlive them.”

    Additional data and analysis about the attitudes, beliefs and concerns of retirees regarding their financial wellness in retirement can be found at www.spectrem.com.

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