Amid high
levels of financial stress, a quarter of Americans believe a financial plan would
alleviate their anxiety, a survey says.
Nearly nine
in 10 of Americans (86%) say they feel stress when it comes to their finances,
with women (89%) and younger respondents between the ages of 18 and 44 (91%)
the most anxious about their finances. This is according to a survey conducted
by ORC International on behalf of the Certified Financial Planner Board of
Standards (CFP Board).
However, 27%
said that if they created a financial plan, they believe it would reduce their
stress. Other ways to reduce their financial stress cited by respondents are: becoming
more financially literate (22%), becoming more aware of their own finances
(14%) and spending more time analyzing their finances (12%).
“Whether you
are navigating the financial implications of living on your own for the first
time or preparing for retirement, almost everyone—at every stage of
life—experiences financial stress,” says Eleanor Blayney, consumer advocate for
the CFP Board. “As long as that financial stress does not paralyze us, it is
not necessarily a bad thing. The resulting awareness should empower us to take
control of our financial fate.”
Asked what
is causing them financial stress, respondents cited debt (23%) as the No. 1
reason, followed by everyday expenses (21%), health expenses (14%) and
retirement (13%). As to when they most feel the weight of this anxiety, it’s usually
at the end of the month when bills are due (24%), around the holiday season
(15%) and during tax preparation season (11%).
Overall
economic satisfaction among Baby Boomers dropped precipitously in 2015, to 48%
from 65% in 2014 and from 76% in 2011, and the percentage of Boomers feeling
extremely or very confident they will have enough money to last throughout
retirement has declined significantly, to 27% of Boomers in 2015 from almost
four in 10 in 2011.
However,
44% believe their financial situation in five years will be somewhat or
greatly improved. “Baby Boomers are more optimistic about the future, in part due to market gains in the past couple of years, but also partly because more Boomers
remain in the work force still, shoring up savings,” said Cathy Weatherford,
president and CEO of IRI, discussing a report, “Boomer Expectations for Retirement 2015,” from IRI during a kickoff call for National Retirement Planning Week.
Only
six in 10 Boomers report having money saved for retirement, down sharply from
prior years when approximately eight in 10 had retirement savings. Only 28% of
Boomers are extremely or very confident they will have enough money to pay
their medical expenses in retirement, down from 37% in 2011, and only one in
five are extremely or very confident they will have enough money to pay for
long-term care in retirement, down from about one-quarter in prior study years.
More
than one-third of working Boomers (36%) plan to retire at age 70 or later,
significantly higher than the one in five (19%) that planned to retire at or
after age 70 in 2011. One in five Boomers (18%) are uncertain when they might retire,
and three-quarters of them cite not having saved enough or being unsure they
will have enough to retire on as the reason for their uncertainty, compared with almost four in 10 (39%) that were unsure
of their retirement age in 2011.
IRI’s survey found Baby Boomers
who work with advisers are better prepared for retirement. More than 90% of
Boomers who work with advisers have money saved for retirement, and more than
eight in 10 feel they are better prepared for retirement because they work with
a financial professional.
“I
think it’s important to consider that Boomers who work with advisers are better
prepared,” said Weatherford. “Professional financial help can add tremendous
value around preparedness, confidence and anticipation of cognitive problems.”
According
to the survey, annuity ownership is highly correlated with retirement planning,
retirement readiness and positive retirement expectations. More than nine in
10 Boomers who own annuities have money saved for retirement; less than half of
Boomers who do not own annuities have retirement savings.
Eight
in 10 Boomers who own annuities expect their money to last throughout
retirement, and to have at least some disposable income for travel and leisure,
compared with less than half of those who do not own annuities. More than six in
10 have calculated the amount they think they will need to have saved to retire,
versus less than one-third of non-annuity-owners.
More
than six in 10 annuity-owner Baby Boomers have consulted a financial adviser to help
them prepare for retirement; fewer than two in 10 non-annuity-owners have taken
this step.
According
to Weatherford, the goals of National Retirement Planning Week goal are to make
Americans aware of the need to plan for retirement, to encourage those who have
planned to review and update their plans, to urge Americans to take a long term
view of saving and investing, and to distribute information to help them make
good, informed decisions.
Weatherford added that
during National Retirement Planning Week, Tuesday is designated as Social Security
Day and Thursday as Health Care in Retirement Day. Materials for consumers and
financial professionals can be found on www.retireonyourterms.com.