Nearly half of American retirement savers believe they’re already too far behind to reach their savings goals, but 90 percent of this group agrees that accumulating enough savings is an important factor in being able to enjoy their future retirement.
According to the Chasing Retirement Study from Allianz Life Insurance Company of North America (Allianz Life), “Chasers” account for 49 percent of Americans age 45-65 who are currently saving for retirement. They are actively saving for retirement but said they need to catch up on savings. The group believes they need help understanding solutions that could close their savings gap in time for retirement, according to the report.
In the study, Chasers are specifically defined as identifying with at least two of the following perspectives: savers who have fallen behind on where they should be in order to retire; wish they could generate savings faster; or those who are worried if they don’t accumulate savings in the near future, they will have no chance of retiring comfortably.
Over 85 percent of Chasers said they feel they have fallen behind in their savings goals (compared to 4 percent of non-chasers), and the same amount are worried it’s too late for them to have a comfortable retirement if their savings aren’t increased soon (compared with only 2 percent of non-Chasers), according to the report.
Chasers are desperate for more retirement savings, but are not willing to assume additional risk. An overwhelming 98 percent of Chasers said they wish they could make up for lost time in their retirement savings (compared with 41 percent of non-Chasers) --- 63 percent of Chasers said they can’t take the risk of investing in high risk/high reward financial products, the study found.
“Among those Americans actively saving for retirement, our study finds a dramatic difference between those who feel on track and those who feel behind, with this subset wishing for ways to catch up but without taking on too much risk,” said Paul Kelash, vice president of Consumer Insights for Allianz Life. “While it’s a positive that they are actively saving for retirement, the level of anxiety is concerning and many are simply not aware of potential solutions to help them catch up.”
Chasers may be lacking the education needed to change their financial trajectory. Respondents had a mean retirement portfolio of more than $400,000, but still struggle to keep up with their payments. More education on financial products could help ease their uncertainty, according to the report.
Chasers own fewer financial products, likely because of their lack of understanding product benefits. Only 53 percent of Chasers have an individual retirement account (IRA), and even fewer own individual stocks (35 percent), mutual funds (35 percent), have a pension with their employer (37 percent) or own an annuity (14 percent).
In comparison, confident savers own an IRA (70 percent), individual stocks (56 percent), mutual funds (51 percent), have a pension from an employer (53 percent) or own an annuity (28%), according to the report.
Most Chasers are not prioritizing retirement highly enough — 54 percent said they currently have too many other expenses to keep up with contributions, while one in five said they’re saving for other financial goals. As a result, two-thirds of Chasers fear they will run out of money in retirement, and 61 percent believe they will need to keep working past their projected retirement age.