Planning and Progress 2013 Study - Continued 

 

Northwestern Mutual sponsored a study exploring the state of planning in America today that provides unique insights into people’s current attitudes and behaviors toward money, goal-setting and priorities. The study surveyed more than 1,500 Americans aged 25 or older. (Conducted 2013)

For additional findings, click here.

Retirement and Longevity 

Optimism in America 

Gender Differences 

 

 

 

Retirement and Longevity

Just over half (56%) of Americans say they’re financially prepared to live to the age of 75, yet 10% expect to work into their 80s, according to Northwestern Mutual’s 2013 Planning & Progress study.

Download Planning & Progress 2013 - Retirement and Longevity

On average, pre-retirees say they will retire at age 68, even though the mean age of retirement among those already retired is 59.

Looking closer at the breakouts, it’s clear the number of Americans expecting to retire young is very small, while the number expecting to work into their 70s and 80s is considerable.  Specifically:

  • 6% expect to retire before the age of 60
  • 52% expect to retire in their 60s
  • 32% expect to retire in their 70s
  • 10% expect to retire in their 80s

Meanwhile, when Americans were asked about their financial preparedness, based on their current situation, future prospects and long-term plans:

  • 56% said they’re prepared to live to the age of 75;
  • 44% said they’re prepared to live to the age of 85; and
  • 35% said they’re prepared to live to the age of 95.

Yet, there’s a 50 percent chance that a 65-year-old man today will live beyond age 87 and that a 65-year-old woman will live beyond age 90.  If they’re married, there’s a 50 percent chance that one of them will live beyond age 94. (Annuity 2000 table)

Financial Insecurity

In other findings, half (51%) of Americans say they are less financially secure than they thought they’d be at this point in their lives. Overall, just over four in ten (43%) Americans currently feel financially secure, while one in three (32%) do not feel financially secure, and the remaining quarter falls in the middle, not feeling strongly secure or insecure.

The study defined “financial security” as “a feeling of confidence that you will achieve the financial goals you have for yourself or your family through the actions you are currently taking.

The Least Financially Secure Americans

Within the study, several subgroups emerge as being among the least financially secure in America.

62% of single Americans say they’re less secure than they thought they’d be by now, compared to 43% of married people who say the same.

Those with children under 18 are less financially secure now (56%) compared to where they thought they’d be, whereas those with older children (49%) or no children (49%) feel slightly more secure.

Gen Y (59%) and Gen X (63%) are less secure now than they thought they’d be, but the Mature Generation (36%) is more likely to say they are just where they thought they’d be or are more secure than they thought they’d be.


 

Optimism and the American Dream

Eight out of ten (79%) Americans believe “the American Dream” is alive, and three quarters (73%) are optimistic, saying they generally see the world as “Glass Half Full” vs. 27% who see it as “Glass Half Empty.”  These are the latest findings from Northwestern Mutual’s 2013 Planning & Progress Study.

Download Planning & Progress 2013 – Optimism and the American Dream

However, digging into these findings reveals some deep-seated skepticism.

The study showed:

  • Only 9% say the American Dream is as good as – if not better than – it was a generation ago;
  • 36% say it is alive but people’s priorities and ambitions are different, and that it is defined more by happiness, health and balance in life;
  • 34% say it is alive, but opportunities are not as good as they were a generation ago; and
  • 21% say it no longer exists. 

Looking ahead, attainability of the American Dream is seen, for the most part, as diminishing, with only 7 in 10 believing that the American Dream will be alive for their children and grandchildren.

Among Americans 25 and older:

  • 36% say it will be alive, but the opportunities won’t be as good;
  • 3% say it will be the same this generation to the next;  
  • 22% say it will be alive, and the opportunities will be just as good – if not better – than they are now.

Does Optimism Come With Age?

You might assume that it is the young who are our most idealistic, and that pessimism sets in with age.  Not so, according to the study.  The most optimistic (seeing the glass half full) Americans are those aged 67 and older (Matures), among which 79% are optimists.  Meanwhile, [among] the least optimistic Americans are those aged 25-32 (Gen Y), where one in three (33%) is a pessimist.

While those age 67 and older (Matures) are more optimistic they are also more likely to be skeptical about the American Dream. One-third of Matures believe the American Dream no longer exists (31%), and four in ten believe the American Dream will no longer exist for their children or grandchildren (37%).

In earlier findings from the study, Gen Y stood out for its financial planning, with 24% considering themselves highly disciplined, compared to 16% for Gen X, 14% for Baby Boomers, and 15% for Matures.

Gender Differences

The latest research from Northwestern Mutual’s 2013 Planning & Progress Study revealed attitudinal and behavioral discrepancies between how men and women are planning for their financial futures – and why they’re falling behind on financial goals.

Download Planning & Progress 2013 - Gender Differences

According to the study, one in four Americans say they’d like to be more cautious with their money, but feel they have a lot of catching up to do.

When comparing men and women, the study showed:

  • Men are more likely to say they’re “Disciplined” financial planners (37% vs. 31%), but also that their financial planning needs improvement (66% vs. 59%)
  • Women are more inclined to take immediate action to spend less – 44% plan to cut spending in the next 12 months vs. 34% of men
  • Men are twice as likely to say they’ve fallen behind due to market losses on investments, and admit they’ve suffered declines in their retirement savings over the last three years (25% vs. 9%)
  • Women are less likely to say they’re comfortable with the risks associated with growth strategies when investing for the future (10% vs. 16%)

An analysis of why Americans feel they’ve fallen behind, uncovers additional differences. The study found:

  • Women are more likely to cite unexpected expenses (60% vs. 43% of men) and debt (54% vs. 40%) as reasons for wanting to catch-up. These were also top responses from men
  • Men attribute a lack of effective planning for the long-term as the #2 reason for falling behind (42% vs. 32%)


Hindsight is 20/20: Save Early, Save Often

When people 55 and older were asked about the best financial decisions they’ve ever made, men and women agree that saving money in one form or another is key.  The differences lie in how they did it:

  • Men were more likely to say the best decision they made was to invest heavily in their 401(k)s (35% vs. 21%); and twice as likely to say investing the majority of their savings in the stock market (17% vs. 8%)
  • Women’s top tactics were to start saving early, paying off their mortgage, buying real estate at a good price and to buy products with guarantees, like insurance and annuities

Across all age groups, men are more likely than women to say they make decisions on their own (75% vs. 64%), while women are more likely than men to get financial planning advice from family (28% vs. 20%).


Men Feel More Financially Secure

Despite men’s greater comfort with risk, and higher probability of having suffered market losses, they still feel more financially secure than women.  Study results showed:

  • 47% of men feel financially secure right now, compared with just 40% of women
  • One third of women surveyed do not currently feel financially secure
  • Only 53% of women are financially prepared to live to age 75, compared to 60% of men
  • 32% of women say have the financial resources to live to age 95, compared with 38% of men

 

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