The 2018 Planning & Progress Study seeks to provide unique insights into U.S. adults’ attitudes and behaviors toward money, financial decision-making, and the broader landscape issues impacting people’s long-term financial security. The study is based on an online survey of 2,003 U.S. adults age 18+ conducted from March 7-19, 2018 (and an oversample of 601 interviews with U.S. Millennials age 18-34 which has been combined with the general population of those age 18-34 when featuring this group). Data were weighted to be representative of the U.S. population (age 18+) based on Census targets for education, age/gender, race/ethnicity, region and household income.
Americans feel underprepared for the financial realities of retirement, according to new data from Northwestern Mutual. Nearly eight in 10 (78%) Americans are “extremely” or “somewhat” concerned about affording a comfortable retirement while two thirds believe there is some likelihood of outliving retirement savings.
These fears are substantiated by further data highlighting dramatic savings shortfalls and ebbing confidence in social safety nets.
- One in five Americans (21%) have NO retirement savings at all
- One in three Baby Boomers (33%), the generation closest to retirement age, only have between $0-$25,000 in retirement savings
- Three quarters of Americans believe it is “not at all likely” (24%) or only “somewhat likely” (51%) that Social Security will be available when they retire
- Nearly half (46%) of adults have taken no steps to prepare for the likelihood that they could outlive their savings
This is the initial set of findings from the 2018 Planning & Progress Study, an annual research project commissioned by Northwestern Mutual that explores Americans’ attitudes and behaviors toward money, financial decision making, and the broader landscape issues impacting long-term financial security.
Living Long…and Working Longer
Concerns about financial security in retirement are leading people to work longer. In fact, more working Americans anticipate retiring at 70 years or older (38%) than in the more traditional 65-69 age range (33%).
Among the more than half (55%) of Americans who believe they will have to work past age 65 from necessity, 73% cited “not enough money to retire comfortably” as the dominant driver.
Other reasons mentioned include:
- Social Security not being sufficient to take care of their needs (61%)
- Concerns over rising costs like healthcare (52%)
For those who plan to work past 65 by choice, disposable income (55%) and professional satisfaction (54%) were near equal motivators. This is a notable contrast to 2015 Planning & Progress Study findings where career enjoyment was the leading driver (66%) followed by interest in additional income (60%).
Financial security emerged as the most important attribute of a positive outlook on life, according to new research released today by Northwestern Mutual. An overwhelming 9 in 10 Americans (87%) agree that nothing makes them happier or more confident than feeling like their finances are in order.
These are the latest findings from the 2018 Planning & Progress Study, an annual research project commissioned by Northwestern Mutual that explores Americans’ attitudes and behaviors toward money, financial decision making, and the broader landscape issues impacting people’s long-term financial security. The first set of data around retirement savings was released in May.
While nearly seven in 10 Americans (68%) said they feel happy about their financial situation at least sometimes, a good portion also consistently experience a range of negative emotions such as:
- Anxiety (54%) (25% “all the time” or “often”)
- Insecurity (52%) (24% “all the time” or “often”)
- Fear (48%)
Money also emerged as the dominant source of stress (44%), dramatically outpacing personal relationships (25%) and work (18%). This is not surprising, considering that the following are just some of the financial pressures causing at least four in 10 Americans to experience “high” or “moderate” levels of anxiety:
- Rising cost of healthcare: 59%
- Unplanned financial emergency: 55%
- Unplanned health emergency: 53%
- Income: 48%
- Level of savings: 48%
- Debt: 42%
- Planning for retirement: 41% --- up from 37% in 2017
The psychological and lifestyle implications of financial anxiety are sobering. More than a quarter of Americans (28%) said that financial anxiety makes them feel depressed at least monthly, with 17% suffering depression as often as weekly, daily, and even hourly. Other effects people experience at least a few times a year include:
- Impact on relationships with spouses/partners: 41%. In fact, 1 in 5 (19%) Americans said they have financial disagreements with their significant other at least monthly
- Missing out on social events: 45%
- Issues with family members other than partners/spouses: 38%
Two thirds of Americans find it challenging to navigate spending now versus saving for later --- and a financial advisor may be the solution. According to the latest findings from Northwestern Mutual’s 2018 Planning & Progress Study:
- Nearly 7 in 10 (67%) Americans who use a financial advisor believe they have clarity on how much to spend now and save for later compared to less than half (44%) of those without an advisor
- Individuals without an advisor are more than twice as likely as people with an advisor (34% vs 13%) to say they are “not at all confident” they have the balance between spending and saving correct. This may be one reason why those without an advisor are more likely than those with an advisor (60% vs 37%) to point to debt reduction as a top priority
Study results also showed Americans who work with financial advisors demonstrate higher levels of retirement readiness, disciplined planning, and financial confidence. Specifically:
- More than half (54%) of those with an advisor feel very financially secure. Only a fraction of people (21%) without an advisor said the same
- Three quarters (75%) of Americans with advisors consider themselves “disciplined” or “highly disciplined” financial planners relative to just 37% of those without an advisor
- More than 7 in 10 people with an advisor said their plan has been created to endure market cycles --- compared to less than a third of those without an advisor (29%)
- The majority (59%) of Americans with an advisor believe that, if they work past traditional retirement age, it will be by choice rather than from necessity (41%). Notably, the inverse is true for those without an advisor, with 6 in 10 (61%) expecting to remain employed past retirement age from necessity
These are the latest findings from the 2018 Planning & Progress Study, an annual research project commissioned by Northwestern Mutual that explores Americans’ attitudes and behaviors toward money, financial decision making, and the broader landscape issues impacting people’s long-term financial security.
Not all advice is created equal
While the findings underscore the overall value of working with an advisor, Americans cited several attributes that distinguish a remarkable advisor experience from just an acceptable one. “Someone I can fully trust to have my best interests at heart/not just out to sell product” emerged as the leading priority (57%). Other factors included:
- “Not feeling judged on size of assets/financial decisions” (36%)
- “Deep expertise across a wide range of financial solutions and strategies” (33%)
The importance of relationship also resonated in preferences around the delivery of advice. 6 in 10 Americans said a human relationship combined with technology is ideal while only 11% opted for a fully automated solution.