By Cyril Tuohy
A new study by Genworth has found that 53 percent of U.S. adults have not started to make financial arrangements for retirement. Furthermore, 40 percent of respondents said their biggest financial regret is not having saved enough for retirement.
In another survey, about one-third of American adults don’t have any emergency savings according to the national nonprofit NeighborWorks America.
The lack of planning and low savings rates — which doesn’t come as a surprise to many experts — paints a financial existence consumed by day-to-day concerns instead of the thoughtful long-term outlook that is necessary to secure an adequate standard of living.
Both surveys reveal the latest statistics of a nation underprepared for the financial responsibilities and burdens that are likely to unfold in the future.
Tom McInerney, Genworth president and CEO, said in a statement that preparing for future aging and care needs “is one of the biggest issues Americans are facing today.”
“Competing financial obligations, lack of information and even fear prevent many from making a plan simply because they don’t know how to approach retirement planning and take the first step,” McInerney said.
Indeed, at a recent gathering of mutual fund and annuity executives, legislative experts said that retirement preparedness was rapidly eclipsing health care as the major social issue of our time.
Other retirement experts say the retirement crisis isn’t as dire as it’s made out to be because savings rates, while still low, don’t include home equity and other assets that one day will be used to help pay for retirement needs.
The Genworth survey found that when asked about the amount of money they will need in order to retire, adults said they would need, on average, $1.7 million.
But of the survey respondents who said they had started making retirement arrangements, the average age was 33 years old, and this group reports an average annual retirement savings of $7,360, Genworth found.
Average annual savings of $7,360 for a 33-year-old investor would grow to about $500,000 by age 65.
The NeighborWorks America survey found that 34 percent of U.S. adults — more than 72 million people — don’t have any emergency savings. This is up from 29 percent of adults reporting no emergency savings a year ago.
The survey also found that 47 percent of adults said their savings would last three months or less, an increase of 6 percentage points over a year ago.
“These data are sobering, but not that surprising for those of us who have been working on the front lines to help families rebuild their finances,” said Paul Weech, president and CEO of NeighborWorks America.
He said the findings showed that people have not yet recovered from the recession, even though it was officially declared over by the summer of 2009, according to the U.S. National Bureau of Economic Research.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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