Americans’ retirement nest egg is broken, according to a a study by BlackRock released Thursday.
There is a vast gap between people wanting a secure retirement and the success they are having in saving to fulfill that goal, BlackRock said based on its survey of 4,213 U.S. residents..
One of the factors creating this problem is that too many people are holding too much money in cash, BlackRock says.
Saving to live comfortably in retirement was cited as the most important financial priority by Americans after saving money in general, yet the majority (71 percent) are concerned they will not accomplish that goal, according to the company. Baby boomers say they want to have $45,500 in annual retirement income, but the nest eggs they have accumulated ($136,200 in average retirement savings) could provide $9,129 of estimated annual retirement income, BlackRock says. That leaves an annual gap of $36,371.
“It’s clear the proverbial ‘nest egg’ is broken and misleads investors into guessing how much they want in retirement and whether they really have enough savings to reach their goals,” says Rob Kapito, BlackRock president.
Americans admit to holding 65 percent of their money in cash, too high an allocation to achieve their retirement goals, considering the low interest rates and inflation, BlackRock says. In addition, one quarter of Americans do not put aside money in long-term savings and only 14 percent have a formal financial plan for retirement.
Forty-one percent of Americans say they are interested in using robo advisors and online investment services that provide recommended portfolios, although 72 percent of people interested in robo advisors also say that they value professional financial advice.