Planning and Progress 2014 Study -- Continued 

 
Northwestern Mutual again explored the state of financial planning in America today to obtain insights into peoples attitudes and behaviors toward money, goal-setting and priorities. The 2014 study surveyed nearly 2,100 American adults 18 or older.

View additional findings

American Priorities 

Retirement Redefined 

Money and Retirement 

 

 

 

Priorities Among Americans

“Personal finances” and “personal health” are the top two priorities for Americans in 2014, ahead of things like “spending time with family and friends” and “career.” But prioritizing appears to stop short of taking action when it comes to personal finance.  While six in ten adults (60%) say their financial planning needs improvement, a large majority are not seeking professional help. Two thirds of Americans don’t have a long-term financial plan and 71% do not have a financial advisor.

Download Planning and Progress 2014 - Priorities Among Americans

According to the study, the majority (70%) of American adults feel that the economy will experience future crises, and that they need a financial plan to help them weather the ups-and-downs (52%). But only two in five agree their financial plan can withstand market cycles.

Who Uses Financial Advisors

According to the study, roughly three in ten U.S. adults choose to work with a financial advisor. A closer look at them reveals:

  • They’re focused – Sixty nine percent of those who use advisors consider themselves disciplined planners and 68% feel very financially secure.
  • They have more grey hair – Americans aged 60 and older are three times as likely as those aged 18-29 to use an advisor (41% versus 13%).
  • They have larger families – Those who are married or living with their partner are twice as likely as those not married to use an advisor (33% versus 17%), and parents are more likely to enlist the services of a professional financial advisor more often than those without children (34% versus 20%).

Staying Engaged

The Study found that, among American adults who do have long-term financial plans, too many are not taking the time to revisit them to help ensure they evolve with changing needs and goals over time. For example, the study found that one in four (25%) Americans with written financial plans review them quarterly and 30% review them annually.

Retirement Redefined

Significant differences exist between the attitudes and expectations of Americans who are currently working vs. those already retired, according to the most recent findings from Northwestern Mutual’s 2014 Planning and Progress Study.

Download Planning and Progress 2014 - Retirement Redefined

Most notably, the research suggests that substantial changes in retirement age and lifestyle are on the horizon, people expect to work longer, but a sizable number will do so by choice rather than necessity. Others – and there are plenty of them – aren’t as fortunate and don’t feel they’ll have the luxury of choice.

Among retirees:

  • The average age they retired was 59
  • The large majority (72%) say they are completely retired from working

Among those still working:

  • The average age they expect to work until is 68 (nearly a decade longer than the retirees in the study)
  • Nearly half (45%) say they will continue to work in retirement, not because they have to but because they want to

Sizable numbers of others who are still working are either uncertain about when they’ll retire, or know they don’t have many choices:&

  • One in five (21%) is not sure how many years he or she will spend in retirement
  • More than one in ten (13%) think they’ll never be able to retire
  • Nearly four in ten (38%) aged 60 and over estimate that they will have to work until age 75 or older before they can retire

Working Adults are Pessimistic, but Retirees Say Life After Work is Pretty Darned Good

Working adults tend to use words like ‘bad/poor,’ ‘bleak/dismal’ and ‘nonexistent’ to describe their vision of their own future retirement, whereas retired Americans are more apt to choose words like ‘fun/cheerful’ and ‘good/pleasant’ to describe their retired life today and tomorrow.

The gap between expectations and experience is evident in other research findings as well. For example:

  • Only 37% of working adults expect they will be happier in retirement than they are now
  • But 84% of current retirees say they are happy in retirement, and 60% say they’re happier now than they were when they were working
  • 70% of retirees describe their lives as ‘fulfilling,’ and a large majority focus on health and fitness and stay active with charities

Still, while the majority of retirees say they lead fulfilling lives, it’s not as if they haven’t had to deal with curveballs.  Half of retirees saw health care costs increase significantly in retirement, and among them 45% didn’t anticipate these expenses.

This underscores the need for planning.  In findings released earlier by Northwestern Mutual, the study revealed a link between the discipline an individual brings to financial planning and their happiness in retirement. Retirees who identify themselves as “Highly Disciplined” planners are much more likely than non-planners to say that they are “happy in retirement” (91% vs. 63%).

Americans are encouraged to take the first step in getting a handle on retirement by talking to someone about their concerns. The study found that 42% of adults have never had a conversation with anyone about retirement.

 

Money and Retirement

When it comes to conversation, Americans would rather talk about their own death and the birds and the bees instead of talking with friends and family about money, and that more than two in five Americans have not spoken to anyone about their retirement.

Download Planning and Progress 2014 – Talking Money and Retirement

American adults aged 18+ were asked about the difficulty they might have in talking to others on a range of sensitive subjects; the order of difficulty (somewhat/very difficult) is as follows:

  • Asking to borrow money from your parents (48%)
  • Asking for money back that you loaned a friend/family member (42%)
  • Asking for a raise/promotion (37%)
  • Long-term care needs of your parents (35%)
  • Asking your parents about their wills/estates (31%)
  • Your death / preparations and preferences with your family (30%)
  • Asking your boomerang kids to move out (25%)
  • Budgets and the need to stick to them with your spouse / partner (23%)
  • The birds and the bees (21%)
  • Asking your adult-age children to get a job (15%)

The study found that the topic of retirement is noticeably absent from people’s regular discourse.  In fact, the Planning and Progress Study found that 42% of American adults have not spoken to anyone about their retirement, and only 39% have had conversations with their spouse or partner about the subject.