Financial Disruptions Lead To $2.5T In Lost Retirement Savings
TD Ameritrade’s annual survey reveals developing good savings habits and financial literacy are key to recovery
The Economic Impact
- Two-thirds (66 percent) of Americans surveyed have seen their long-term and retirement plans disrupted (“Disrupted Americans”)
- There is an opportunity cost to disruptions. Financial disruptions cost Americans
$2.5 trillion in lost long-term and retirement savings1 - A loss of employment or having to take a lower-paying job is the most common disruption
Life Before the Disruption
- 84 percent of “Disrupted Americans” were saving for retirement prior to the disruption; the average “Disrupted American” was saving over
$500 /month - 40 percent of “Disrupted Americans” felt that having a steady income meant that they were prepared for a disruptive event
- Prior to the disruption, “Disrupted Americans” were most likely to discuss their financial plans with a spouse or partner
Life During the Disruption
- 79 percent of “Disrupted Americans” had to reduce their savings and/or expenditures during the disruption, and, on average, reduced their retirement savings by almost
$300 /month - 50 percent of “Disrupted Americans” needed to withdraw money from savings or borrow funds
- Decreasing expenditures, using less credit and repaying debt are the most likely changes made by “Disrupted Americans” in order to recover financially
Tips on Staying Retirement-Ready
“Every human being faces the threat of a financial disruption because there will always be external factors that can upset the course of a person’s life. The key is to have a financial plan that incorporates risk management because no one knows when these disruptions can occur,” said
On average, “Disrupted Americans” who are back on track with their long-term retirement goals took almost five years to get there (four years, eight months). Yet, half of those disrupted (49 percent) will need to delay retirement, or forego it completely. With the benefit of hindsight, “Disrupted Americans” said they would have saved a greater proportion of their income (44 percent), started saving or investing earlier for retirement (36 percent) and 26 percent said they wished they had been more educated about long-term savings and investing. According to a recent
1. Limiting use of credit (67%)
2. Saving early and consistently (58%)
3. Spending less on luxuries/discretionary items (58%)
4. Having employment with an excellent salary (56%)
5. Investing in/maintaining a well-balanced portfolio (51%)
“A retirement plan is adjustable and should evolve over time, so self-directed investors are in a better position to more easily take a hands-on approach to their retirement and investing strategies,” said Demmissie. “While no one can predict when, or if, a financial disruption will occur, the key is to focus on what can be controlled. Understanding ones retirement goals, regularly evaluating your portfolio and being prepared to make adjustments to your long-term strategy along the way can help you pursue your retirement plan.”
“Disrupted Americans” interested in getting back on track for retirement are encouraged to visit TD Ameritrade’s Retirement Planning Page, which offers a number of retirement planning resources that can help investors pursue their goals.
The survey findings can also be seen in an infographic by visiting www.AMTD.com.
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About the 2015 Retirement Survey Methodology
An online survey was conducted with 2,019 U.S.-based adults who had experienced an event or situation that had an effect on their financial plans for the long–term/retirement by
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