Americans plan and prioritize for retirement, but are getting lost along the way, according to fresh research from Newark, N.J.-based Prudential Investments.
Most Americans, 80 percent, say that preparing for retirement is their top priority, but only 50 percent of pre-retirees say they have a “strong retirement” plan in place.
That 30-point gap between intent and results is caused by a lack of financial knowledge that persists across generations, says Tony Fiore, senior vice president, national sales manager, retirement investment solutions at Prudential Investments.
“We have a tendency to look at each successive generation finding it harder to save and to draw conclusions about that generation,” says Fiore. “These results were eye-opening because they show that each generation is facing this challenge.”
Only 54 percent of the survey’s pre-retirees reported having a retirement nest egg of $150,000 or more in place.
Even fewer, 42 percent, said that they were aware of how assets were allocated within their retirement portfolios. A similar number of respondents, 43 percent, were unsure about which types of products they had invested in.
“If you look at past studies, millennials are on average underinvested in equities if they’re not using some sort of asset allocation program or target-date fund,” Fiore says. “Accumulation has a lot to do with being able to balance allocations -- it’s not just savings inertia, there’s a combination of factors that are making Americans fall behind.”
On average, Americans grade themselves a “C” in their retirement preparedness, according to Prudential Investments, with 12 percent giving themselves a failing grade.
The survey’s respondents expressed concern over financial emergencies that could negatively impact their savings. The most common fears expressed were health-care costs, potential changes to Social Security and the likelihood of illness or disability as they aged.
Most respondents, 57 percent, said they would use savings to cover a financial emergency, but younger respondents were more likely to opt to borrow money from family or friends or to take out a bank loan to cover their expenses.