American workers are stressed and concerned, and a lot of it has to do with finances! Many Americans age 45 and older say they’ll need $1.1 million for a comfortable retirement, but just 21% say they’ll have saved $1 million by retirement. Nearly 60% expect to have half a million or less by the time they retire. Clearly, there is a tremendous gap between what older Americans think they’ll need for retirement vs. what they believe they’ll actually be able to save.
Those are a one of the findings from the Schroders 2023 Retirement Survey, which polled 2,000 investors ages 27-79 whose median income was $75,000. Of respondents nearing retirement (ages 60-67 years old), less than a quarter (24%) said they had enough money to retire in comfort. That so few American workers have confidence in their retirement comfort points to the work employers, advisors, and the industry still need to do to make it easier for them to achieve retirement security, noted Deb Boyden, Head of U.S. Defined Contribution at Schroders.
The study also found that Americans are stressed and uncertain about their financial situation. According to the survey, 69% of respondents ages 45 and over worry about money every day, on average, 1.6 hours a day. That tallies up to 24 days a year! More than half (59%), say they expect to have less than $500,000 saved. And 34% predict they’ll have less than $250,000 saved. Millennials worry about money even more: 85% say they worry about money every day around 1.9 hours on average, which adds up to 28 days a year. Millennials expect to need $1.3 million for comfortable retirement; but just 29% say they expect to reach $1 million in savings.
Moreover, the Schroders 2023 Retirement Survey indicates nearly 50% of Millennials said they had lost sleep worrying about their financial situation (40% for workers 45 and up); 64% of millennials are concerned that financial stress will negatively affect their overall health (53% of workers 45 and up). Older workers were a bit more concerned about the performance of their retirement plans—half of them (50%) said their retirement plan performance in 2022 caused them anxiety (48% for millennials). These concerns are leading workers to hold onto too much of their retirement savings in cash–many citing fears of the stock market going down. However, these individuals forget that their retirement savings strategy is for the long term, and they are too worried about near-term losses.
There is opportunity to engage American workers who are the savers and offer them advice about staying the course when it comes to their retirement savings and investing strategies, especially if they have a longer time horizon to retirement. Employees are looking to their employers on how to invest in their workplace retirement plans for the future, so further guidance and education is required to help them achieve their long-term goals for a comfortable financial future.
