Retirees are happier than most workers in the U.S., but seven in
10 say they would have “no idea what they would do” without Social
Security
Today’s retirees are the last generation in the United States to
live a retirement shaped by the forces of the prior century,
standing in stark contrast to baby boomers, Generation X,
Millennials and even Generation Z, according to the 2019 Wells
Fargo Retirement study, which examines the attitudes and savings of
working adults and retirees. Now in its 10th year, the survey
spotlights the importance of a planning mindset as people in their
working years must shoulder the burden of funding their own
retirement. The Wells Fargo Retirement study was conducted online
by The Harris Poll on behalf of Wells Fargo among 2,708 workers age
18 to 75 and 1,004 retirees.
The survey found several key characteristics that influence
today’s retiree, who – in this survey – is an average age of 70.
Most striking, more than eight in 10 (86%) retirees fund their
retirement primarily with Social Security or a pension; just 5% say
personal savings, such as an IRA or a 401(k), is their main source
of funding. By contrast, for younger generations the quality of
their retirement will depend almost entirely on how much they save
through vehicles such as a 401(k) or IRA. Indeed, 45% of Millennial
workers say the top source of funding for their future retirement
will come from an IRA or a 401(k), compared to just 25% who say
they expect to rely on Social Security or a pension for their
retirement income.
Primary Source for Paying Retirement
Expenses
Retiree
Baby Boomer
Generation X
Millennial
Generation Z
401(k) and or IRA
5%
22%
41%
45%
44%
Social Security
64%
41%
21%
13%
16%
Pension plan
22%
19%
16%
12%
4%
“Our survey clearly shows stark differences between current
retirees and younger generations and how they will fund
retirement,” said Fredrik Axsater, head of the Institutional Client
Group for Wells Fargo Asset Management (WFAM). “For those still in
the workforce, saving for a viable retirement lies almost entirely
in their own hands, which requires a vastly different strategy and
approach. As an industry, we need to ensure that more workers take
the necessary actions today to adequately fund their retirement
tomorrow.”
Two-Thirds of Workers with Student Loans Say Student Loan
Burden Impedes Retirement Saving
Despite recognition that saving and paying for retirement now
rests with the individual, younger generations hold mixed views
about whether they are saving enough. Moreover, financial
challenges negatively impact the ability of nearly half of workers
to adequately save, the survey found.
Overall, just over half (55%) of workers say they are saving
enough for retirement. By generation, 61% of baby boomers say they
are saving enough, followed by Millennials (55%), Generation X
(51%) and Generation Z (48%).
Debt plays a crucial role in workers’ ability to save, as 31% of
Millennials say they have an “unmanageable amount of debt,”
followed by Generation X (26%), Generation Z (25%) and baby boomers
(14%). Additionally, among all workers, nearly half (46%) say they
are putting off saving for retirement due to current financial
challenges, and 67% of workers paying student loans say the burden
of student loans is getting in the way of saving for
retirement.
As a result, many workers appear to be falling well short of
what they will need to fund their retirement. Twenty-nine percent
have personally saved less than $25,000; 13% have saved between
$25,000 and $100,000; and 11% have saved between $100,000 and
$250,000 – which means that more than half (54%) of workers have
saved less than $250,000 for retirement. Moreover, 32% of workers
can’t estimate what they have saved for retirement – and only 15%
of workers have saved $250,000 or more, according to the
survey.
Looking at workers on a median basis (including those who have
saved $0), baby boomers have saved $160,000; Generation X $66,000;
Millennials $10,000; and Generation Z $2,000.
Personal Savings Levels by
Generation
Retiree
Baby Boomer
Generation X
Millennial
Generation Z
Less than $25K
21%
16%
22%
45%
49%
$25K – <$100K
10%
11%
14%
14%
8%
$100K – <$250K
10%
12%
15%
8%
3%
$250K or more
16%
29%
16%
4%
4%
Not Sure
43%
32%
33%
30%
36%
On the bright side, younger workers are starting to save much
earlier than older generations of workers. Though baby boomers
started saving around age 36 on average, Generation X started at
age 31, Millennials at age 25 and Generation Z at 18, according to
the survey. Today’s retirees began saving for retirement at age 40
on average.
Social Insecurity
Fear that Social Security may not be available for retirement
represents a concern across all working generations in the survey,
with 71% indicating they are “afraid” it won’t be available when
they retire. Just over six in 10 workers (63%) say they would have
no idea what they would do if Social Security were not available
“when they need it,” a concern that jumps to 71% for current
retirees.
Across generations, workers and retirees displayed strong
emotions on the issue – as 91% of workers and 94% of retirees say
they would feel “betrayed” if the money they paid into Social
Security were not available when they retire. Moreover, the survey
found that workers have much more faith in their personal savings
than in Social Security. Only 55% of retirees have more faith in
personal savings than in Social Security, which compares to 79% of
workers.
At the same time, workers recognize that retirement is
increasingly their own responsibility – but they believe that
public policy can still play a role. Ninety percent say that
Congress needs to make it easier for workers to have access to
tax-friendly retirement plans, and 79% say that companies should
automatically enroll new employees in their employer-sponsored
retirement plans.
Planning Mindset
Wells Fargo uncovered four specific statements that, when
affirmed by workers, correlate with a significantly better
financial life, including lower levels of financial stress and
better financial well-being. The attitudes and behaviors inherent
to the statements contribute to what Wells Fargo calls a planning
mindset. These are:
- Setting and achieving a goal or set of goals during the past
six months to support their financial life.
- Working diligently toward a long-term goal.
- Feeling better about having finances planned out over the next
one to two years.
- Preferring to save for retirement now to ensure they have a
better life in retirement.
The planning mindset is highest among retirees (42%), followed
by Generation Z (40%), Millennials (39%), baby boomers (37%), and
Generation X (30%). “By helping investors adopt the behaviors of
the planning mindset, the industry can help put more people on the
path to a secure retirement,” said Axsater.
Current workers with the planning mindset start saving at a
younger age, save more each month for retirement and have saved
more for retirement than workers without the planning mindset.
Moreover, workers with the planning mindset prioritize saving money
for retirement after paying monthly financial expenses (71% versus
53% of those without the planning mindset), say they are in control
of or happy about their financial life (82% versus 46%) and are
confident they will have enough savings to live comfortably in
their retirement years (80% versus 42%).
“Once again, our survey shows that workers and retirees with a
planning mindset say they have better outcomes, both in terms of
actual income but also in their overall enjoyment of their life and
retirement,” said Axsater. “If more workers adopt these behaviors,
more retirees should be better prepared for the rapidly changing
reality of retirement.”
About The Harris Poll
The Harris Poll is one of the longest running surveys in the
U.S. tracking public opinion, motivations and social sentiment
since 1963 that is now part of Harris Insights & Analytics, a
global consulting and market research firm that delivers social
intelligence for transformational times. We work with clients in
three primary areas; building twenty-first-century corporate
reputation, crafting brand strategy and performance tracking, and
earning organic media through public relations research. Our
mission is to provide insights and advisory to help leaders make
the best decisions possible. To learn more, please visit
www.theharrispoll.com
About the Survey
On behalf of Wells Fargo, The Harris Poll conducted 3,918 online
interviews of 2,708 working Americans 18-75 or older and 1,004
retired Americans, surveying attitudes and behaviors around
planning, saving and investing for retirement. In addition, 206
high-net-worth workers were interviewed (age 18-75, with household
investable assets of $1 million or more). The survey was conducted
from June 21 – July 17, 2019. Working Americans are age 18-75 or
older and working full-time (or at least 20 hours if they are
working part-time) or are self-employed. Retired Americans
self-identified as retired regardless of age. Both working and
retired Americans are the primary or joint financial decision-maker
for their household. Data were weighted as needed to represent the
population of those meeting the qualification criteria. Figures for
education, age, gender, race, ethnicity, region, household income,
investable assets, marital status, employment, number of adults in
the household, and propensity to be online were weighted where
necessary to bring them in line with their actual proportions in
the population.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a diversified,
community-based financial services company with $1.9 trillion in
assets.* Wells Fargo’s vision is to satisfy our customers’
financial needs and help them succeed financially. Founded in 1852
and headquartered in San Francisco, Wells Fargo provides banking,
investment and mortgage products and services, as well as consumer
and commercial finance, through 7,500 locations, more than 13,000
ATMs, the internet (wellsfargo.com) and mobile banking, and has
offices in 32 countries and territories to support customers who
conduct business in the global economy. With approximately 261,000
team members, Wells Fargo serves one in three households in the
United States. Wells Fargo & Company was ranked No. 29 on
Fortune’s 2019 rankings of America’s largest corporations. News,
insights and perspectives from Wells Fargo are also available at
Wells Fargo Stories.
*As of September 30, 2019
Wells Fargo Asset Management (WFAM) is the trade name for
certain investment advisory/management firms owned by Wells Fargo
& Company. These firms include but are not limited to Wells
Capital Management Incorporated and Wells Fargo Funds Management,
LLC. Certain products managed by WFAM entities are distributed by
Wells Fargo Funds Distributor, LLC (a broker/dealer and Member
FINRA). 407481 10-19
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version on businesswire.com: https://www.businesswire.com/news/home/20191018005392/en/
Rob Julavits, 646-618-2790 robert.w.julavits@wellsfargo.com
Sarah Kerr, 917-260-1582 skerr@wellsfargo.com
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