People with a “planning mindset” typically have more savings,
less stress, and are more likely to say they’re “thriving” in
life
Generation X still has time to get retirement journey on
track
With the prospect of longer life spans, 38 percent of U.S.
workers age 21 and older say it would be a financial “hardship” to
live past the age of 85, according to the 2018 Wells Fargo
Retirement study, which examines the attitudes and savings of
working adults and retirees. Most workers say they expect to live
to age 85, 42 percent say they could live longer, and 10 percent
say they could live to 95 or older. Now in its ninth year, the
Wells Fargo Retirement study was conducted online by The Harris
Poll on behalf of Wells Fargo.
Although a longer-than-expected life raises the possibility of
financial struggle, retirement in and of itself represents a life
event that most survey respondents look forward to, with 90 percent
saying that retirement will be a “positive new chapter in
life.”
”Americans strive for a good retirement and view it
optimistically,” said Fredrik Axsater, head of Strategic Business
Segments at Wells Fargo Asset Management. “People expect a
retirement that could last 20 to 35 years, and our survey
represents a call to action to help them prepare for this new stage
in their lives, remove fear, and provide more certainty of their
financial future. There is a strong likelihood that retirees will
live longer than they expect.”
The power of a “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:
1. Setting a financial goal during the past
six months.
2. Working toward a long-term goal.
3. Feeling good about planning financial
matters over the next one to two years.
4. Preferring to save for retirement now
rather than waiting until later.
*See appendix for questions
Workers with the planning mindset:
- Are more likely to have a “thriving”
financial life (64 percent versus 36 percent for those without a
planning mindset) or a ”thriving” life overall (79 percent versus
58 percent).
- Are 42 percent less likely to have high
levels of financial stress.
- Have 3.1 times more retirement savings
than someone without a planning mindset.
- Working men with the planning mindset
have saved more for retirement than those without a planning
mindset ($150,000 versus $60,000).
- Working women with the planning mindset
also have saved more than those without a planning mindset ($75,000
versus $30,000).
Across all workers, 84 percent of those with a planning mindset
say they regularly contribute to retirement savings versus 66
percent who do not have this mindset. And fewer people with
the planning mindset — 27 percent — envision living to age 85 or
longer as a financial hardship versus 43 percent who do not have
this mindset.
Income
A planning mindset cuts across household incomes but is more
prevalent among higher earners:
- 33 percent of workers with a planning
mindset have household income of less than $75,000.
- 66 percent of workers with a planning
mindset have income that is $75,000 or greater.
“Regardless of income, establishing a financial plan and living
a life focused on financial goals can deliver many benefits,
including less stress and higher savings, which are the foundations
for building a successful retirement,” said Joe Ready, head of
Wells Fargo Institutional Retirement and Trust. “Maybe money can’t
buy happiness, but planning early can provide more confidence about
the future — which is spanning across decades for many
retirees.”
Unforeseen challenges on the road to retirement
Although 85 percent of respondents say retirement will be a
“positive new chapter in life,” 40 percent say they are not
confident they will have enough retirement income to cover their
needs. Most expect to retire at 65, but 58 percent of retirees
retired earlier than they expected.
Other concerns that workers note in the study include:
- 70 percent are concerned about running
out of money.
- 69 percent don’t know what they would
do if they ran out of money.
- 64 percent of retirees took Social
Security as soon as they could.
“Our findings highlight the unpredictability of life — and
retirement — and that many workers are concerned about running out
of money in their golden years,” said Axsater. “Together with
employers, we can help improve the journey so employees can feel
confident they will be able to retire, rely on a more predictable
income in retirement, and enjoy the positive new chapter in
life.”
Pension and 401(k) – What’s the impact?
401(k) and pension plans together enable people to save more for
retirement than those without access to a pension plan or 401(k).
Forty-six percent of retirees in the survey have access to a
pension as compared to 33 percent of workers. The results of the
survey show that people with access to a pension and a 401(k) save
the most and feel most confident about retirement.
Workers
PensionAccessONLY
401kAccessONLY
Access toPensionAND
401k
No PensionNo 401k
Combination household and personal amount saved for retirement
including $0 (median) $65,000
$60,000 $150,000 $10,000
Age (median)* 53 40
47 44 Income (median)
$77K $80K $93K
$53K Monthly savings ($) $500
$500 $1,000
$100 Percentage with a planning mindset** 34%
38% 41%
26% I have a detailed financial plan (strongly agree/agree)
43% 47% 57%
39% In control / happy about my current
financial life / financial life in retirement 65%
62% 74%
48% Confident about living comfortably throughout my
retirement years 60% 61%
72% 45%
* Average age of total workers is 44
**36% of workers have a planning mindset
Only 32 percent of workers with access to a pension and a 401(k)
indicate that living to age 85 or beyond would be a financial
hardship. However, for those without access to a 401(k) or a
pension, this concern for hardship in the future rises to 45
percent of workers.
Users of a 401(k) do not see it as strictly a means for
accumulating savings: 86 percent of workers agree that it would be
“valuable” if their plan provided a statement on how much they
could spend each month in retirement, based on their current and
projected savings. Younger workers also would like to see their
employer provide more help with their retirement choices: 73
percent of Millennial workers and 63 percent of Gen X workers say
they would like more help from employers, compared to 50 percent of
baby boomers.
“It is important for employers to recognize the role they play
as they consider services to help people manage the bulk of their
retirement nest egg — not just to but through retirement,” said
Ready. “As the sponsor for their retirement plan, the employer is
increasingly seen as a trusted source of information for retirement
planning among younger workers.”
Accumulated savings by generation
Savings continue to be a challenge for many investors. Following
are the median retirement savings reported by men and women across
generations:
Total
Men
Women
Millennial
$15,000 $20,000 $10,000
Generation X
$100,000 $100,000 $75,000
Baby boomer
$250,000 $300,000 $160,000
Retiree
$125,000 $250,000 $35,000
(These figures represent median amounts saved, combining both
individual and household savings reported, including those who
report “0.”)
Across all workers in the survey, 68 percent have access to a
401(k) plan, which the study shows is an important retirement
vehicle, with 92 percent saying they feel “more secure” about
retirement because they have “contributed to” or “are contributing
to” a 401(k).
Eighty-two percent of workers who have access to a 401(k) say
they would not have saved as much for retirement if not for the
401(k), which breaks down to 80 percent of men and 85 percent of
women savers.
Across all generations, 21 percent of those with household
income of $75,000 to $100,000 are saving $1,000 a month or more for
retirement.
“Saving for a retirement that is 20 to 30 years down the road is
not easy. It always requires real-time trade-offs,” said Ready.
“It’s good to see that people earning around the median household
income in the U.S. today can put away as much as $1,000 a month.
This is going to help them better prepare for retirement.”
Generation stress
Among working generations, Gen X workers — defined roughly as
those born between 1961 and 1981 — and Millennials exhibit the
highest levels of stress. In the midst of their peak earning years
and with at least a decade left in their careers, 55 percent of Gen
X workers describe themselves as “struggling” or “suffering” in
their financial lives. Similarly, 60 percent of Millennials say
they see their financial lives as “struggling” or “suffering,”
highlighting the challenges younger workers face as they prepare
for retirement. Not surprisingly, fewer than half — 48 percent — of
Gen X workers say they are saving enough for retirement, as
compared to 58 percent of baby boomers.
With respect to the younger generations, 39 percent of Gen X
workers and just under half (46 percent) of Millennials say the
401(k) will be the primary financial source for paying expenses in
retirement, as compared to 25 percent of baby boomers.
Pressures on Generation X
Pressured by the financial responsibilities of raising children
and supporting aging parents, Gen X workers are nearing the
critical pre-retirement phase. However, among Gen X workers, only
45 percent say they have a detailed financial plan — the lowest
rate of planning among all generations.
Twenty-four percent of Gen X workers say they have
“unmanageable” debt, very close to the 26 percent of Millennials
who report “unmanageable” debt. When asked to rank their financial
priorities after paying off monthly expenses, Gen X respondents say
that saving for retirement ranks highest, at 58 percent, followed
by 54 percent who say it is important to pay off debt (credit
cards, loans). For Gen X respondents, paying off debt as a priority
outranks both Millennials and baby boomers by at least 9 percentage
points.
The way Gen X workers perceive their financial life is divided
along gender lines: 50 percent of Gen X males describe their
financial life as “thriving” versus 39 percent of females. With
respect to retirement savings, men report they have saved a median
of $100,000 for retirement versus $75,000 saved by women.
“Our survey found financial uncertainty among all generations,
but it was very pronounced for Generation X,” said Ready. “It’s not
too late! They need to quickly step up their savings to leverage
their biggest asset — the power of time.”
The Great Recession
The Great Recession continues to affect today’s workers, with
the highest impact on Generation X: 30 percent of Gen X workers say
they “still carry scars” from the financial crisis, versus 27
percent of baby boomers and 24 percent of Millennials.
Looking back on the recession also shows a misconception of
market performance over the past decade, as 52 percent of workers
say that people who kept their money in the stock market benefitted
from a decade of market gains. Generationally, baby boomers were
the most likely to agree (62 percent), followed by Gen X
respondents (53 percent) and Millennials (43 percent).
The survey also looked at how people view market performance
based on asset levels. Fifty-two percent of people surveyed who
have assets of between $100,000 and $200,000 say that people who
kept their money in the market since 2008 have benefited from the
market recovery; the percentage increases to 84 percent for people
with $500,000 or more in investable assets.
A little more than half — 56 percent — say that “the Great
Recession of 2008 taught me the value of diversification as a way
to ride out market ups and downs.” Baby boomers (62 percent) were
most likely to agree with the statement, followed by Gen X
respondents (57 percent), and Millennials (50 percent).
“Gains in the last decade have been generally significant for
anybody with money in the market,” said Axsater. “The fact that
only half of investors recognize that people have benefited from a
decade-long bull market is remarkable and demonstrates the need for
us to continue to emphasize the power of being invested along with
the power of diversification over long market cycles.”
Digital assistance
Despite the rapid adoption and acceptance of digital assistants,
such as Siri or Alexa, the majority of workers say they would be
unlikely to seek advice from one for retirement planning.
Nonetheless, 19 percent of all workers say they would be likely to
seek advice from a digital assistant — a figure that jumps to 27
percent for Millennials, followed by Gen X respondents (19
percent). Only 8 percent of baby boomers and just 3 percent of
retirees are likely to do so.
________________________________________________________________
Appendix: The planning mindset
A planning mindset is composed of survey participants’
affirmation of four statements:
- “I am able to work diligently toward a
long-term goal.”
- “I prefer saving for retirement now, to
ensure I have a better life in retirement.”
- “It makes me feel better to have my
finances planned out in the next 1–2 years.”
- “In the past six months, I have set and
achieved a goal or set of goals to support my financial life.”
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,
investments, mortgage, and consumer and commercial finance through
7,950 locations, 13,000 ATMs, the internet (wellsfargo.com) and
mobile banking, and has offices in 37 countries and territories to
support customers who conduct business in the global economy. With
approximately 262,000 team members, Wells Fargo serves one in three
households in the United States. Wells Fargo & Company was
ranked No. 26 on Fortune’s 2018 rankings of America’s largest
corporations.
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 3,563 online
interviews of 2,560 working Americans 21 or older and 1,003 retired
Americans, surveying attitudes and behaviors around planning,
saving and investing for retirement. The survey was conducted from
August 6 – 20, 2018. Working Americans are age 21 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.
All investing involves risk, including the possible loss of
principal. There can be no assurance that any investment strategy
will be successful.
Wells Fargo Wealth and Investment Management, a division within
the Wells Fargo & Company enterprise, provides financial
products and services through various bank and brokerage affiliates
of Wells Fargo & Company. Recordkeeping, trustee and/or custody
services are provided by Wells Fargo Institutional Retirement and
Trust, a business unit of Wells Fargo Bank, N.A.
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).
This material is for general informational and educational
purposes only and is NOT intended to provide investment advice or a
recommendation of any kind—including a recommendation for any
specific investment, strategy, or plan.
318284 11-18
CAR-1118-00984
View source
version on businesswire.com: https://www.businesswire.com/news/home/20181114005575/en/
MediaAmy Hyland Jones,
704-374-2553Amy.hylandjones@wellsfargo.comRob Julavits,
646-618-2790robert.w.julavits@wellsfargo.com
Wells Fargo (NYSE:WFC)
Historical Stock Chart
From Mar 2024 to Apr 2024
Wells Fargo (NYSE:WFC)
Historical Stock Chart
From Apr 2023 to Apr 2024