16 April 2021

Will Americans Have Enough Saved for Retirement?

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Although many Americans have focused on saving for the future during the pandemic, most still have their work cut out for them. In a recent survey by the investment management firm Schroders, fewer than one in three respondents described their retirement planning as “very good” or “fully on track.” The situation is even worse for those nearing retirement age: Only 26 percent of non-retired respondents in this age range said they have enough money saved for retirement, while 60 percent said they do not have enough saved and 14 percent don’t know if their savings are adequate.

“The good news is people are focused on saving for the future even during COVID,” said Joel Schiffman, head of intermediary distribution, North America, for Schroders. “But the question remains, ‘Will they have enough for retirement?’ The way to improve retirement readiness is through better knowledge, guidance and investment choices.”

The lack of certainty in their planning may be affecting how respondents are managing and monitoring their retirement assets, as even younger investors have an abundance of cash and less in equities than older investors. Investors between the age of 45 and 59 report the following asset allocations:

Equities, 30 percent

Cash, 37 percent

Fixed income, 17 percent

Target date, 15 percent

Other, 11 percent

By contrast, those from 60 to 67 but not retired report this allocation:

Equities, 35 percent

Cash, 25 percent

Fixed income, 23 percent

Target date, 9 percent

Other, 8 percent

The three most common barriers to proper retirement planning are inadequate savings (70 percent), more pressing financial priorities (60 percent) and uncertainty about the future (50 percent)

“It’s a Catch-22 situation,” Schiffman said. “Investors need a plan to generate enough assets for retirement, but they don’t think they have enough assets to justify a plan. Planning doesn’t require a lot of assets; it starts with setting a goal and saving toward it by taking advantage of an employer’s defined contribution plan or opening an investment account or IRA. Every dollar saved and invested is a step closer toward being able to generate sustainable income in retirement.”

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