Does Appreciating the Importance of Retirement Planning = Action?
Grasping the importance of preparing for retirement does not necessarily translate to action to bring it about, says a recent study on Americans’ financial beliefs and behavior.
There is good news, says the survey commissioned by Fifth Third Bank
on those beliefs and whether Americans are acting on them. Strong majorities agree that their retirement savings should reflect age, health status, expenses and standard of living (84%) and say financial independence is a goal of theirs (82%). Approximately half know that they need to set money aside in savings accounts and appreciate the importance of an emergency fund, and 46% agree that saving for retirement should begin when one is in one’s 20s.
But the survey also shows that this understanding does not necessary spell action to implement it. Fifty-five percent of the respondents do not contribute to an IRA, 401(k) or other retirement plan. Just 50% know how much is in their retirement accounts, and 70% of respondents who belong to Generation X do not consider themselves to be in excellent financial shape regarding retirement readiness.
The study found that at least some explanations for the disconnect are not due to indiscipline, but to economic factors, including:
- 69% baby boomers have credit card debt;
- 47% of respondents frequently live paycheck to paycheck;
- 39% of Millennials have student loan debt;
- 37% of Generation X respondents have car loans; and
- 34% of Baby Boomers have mortgages.