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Retirees Live a 20th Century Retirement in the 21st Century, Wells Fargo Survey Finds

SAN FRANCISCO--(BUSINESS WIRE)--

Retirees are happier than most workers in the U.S., but seven in 10 say they would have “no idea what they would do” without Social Security

Today’s retirees are the last generation in the United States to live a retirement shaped by the forces of the prior century, standing in stark contrast to baby boomers, Generation X, Millennials and even Generation Z, according to the 2019 Wells Fargo Retirement study, which examines the attitudes and savings of working adults and retirees. Now in its 10th year, the survey spotlights the importance of a planning mindset as people in their working years must shoulder the burden of funding their own retirement. The Wells Fargo Retirement study was conducted online by The Harris Poll on behalf of Wells Fargo among 2,708 workers age 18 to 75 and 1,004 retirees.

The survey found several key characteristics that influence today’s retiree, who – in this survey – is an average age of 70. Most striking, more than eight in 10 (86%) retirees fund their retirement primarily with Social Security or a pension; just 5% say personal savings, such as an IRA or a 401(k), is their main source of funding. By contrast, for younger generations the quality of their retirement will depend almost entirely on how much they save through vehicles such as a 401(k) or IRA. Indeed, 45% of Millennial workers say the top source of funding for their future retirement will come from an IRA or a 401(k), compared to just 25% who say they expect to rely on Social Security or a pension for their retirement income.

Primary Source for
Paying
Retirement Expenses

Retiree

Baby Boomer

Generation X

Millennial

Generation Z

 

401(k) and or IRA

5%

22%

41%

45%

44%

Social Security

64%

41%

21%

13%

16%

Pension plan

22%

19%

16%

12%

4%

“Our survey clearly shows stark differences between current retirees and younger generations and how they will fund retirement,” said Fredrik Axsater, head of the Institutional Client Group for Wells Fargo Asset Management (WFAM). “For those still in the workforce, saving for a viable retirement lies almost entirely in their own hands, which requires a vastly different strategy and approach. As an industry, we need to ensure that more workers take the necessary actions today to adequately fund their retirement tomorrow.”

Two-Thirds of Workers with Student Loans Say Student Loan Burden Impedes Retirement Saving

Despite recognition that saving and paying for retirement now rests with the individual, younger generations hold mixed views about whether they are saving enough. Moreover, financial challenges negatively impact the ability of nearly half of workers to adequately save, the survey found.

Overall, just over half (55%) of workers say they are saving enough for retirement. By generation, 61% of baby boomers say they are saving enough, followed by Millennials (55%), Generation X (51%) and Generation Z (48%).

Debt plays a crucial role in workers’ ability to save, as 31% of Millennials say they have an “unmanageable amount of debt,” followed by Generation X (26%), Generation Z (25%) and baby boomers (14%). Additionally, among all workers, nearly half (46%) say they are putting off saving for retirement due to current financial challenges, and 67% of workers paying student loans say the burden of student loans is getting in the way of saving for retirement.

As a result, many workers appear to be falling well short of what they will need to fund their retirement. Twenty-nine percent have personally saved less than $25,000; 13% have saved between $25,000 and $100,000; and 11% have saved between $100,000 and $250,000 – which means that more than half (54%) of workers have saved less than $250,000 for retirement. Moreover, 32% of workers can’t estimate what they have saved for retirement – and only 15% of workers have saved $250,000 or more, according to the survey.

Looking at workers on a median basis (including those who have saved $0), baby boomers have saved $160,000; Generation X $66,000; Millennials $10,000; and Generation Z $2,000.

Personal Savings
Levels by
Generation

Retiree

Baby Boomer

Generation X

Millennial

Generation Z

 

Less than $25K

21%

16%

22%

45%

49%

$25K – <$100K

10%

11%

14%

14%

8%

$100K – <$250K

10%

12%

15%

8%

3%

$250K or more

16%

29%

16%

4%

4%

Not Sure

43%

32%

33%

30%

36%

On the bright side, younger workers are starting to save much earlier than older generations of workers. Though baby boomers started saving around age 36 on average, Generation X started at age 31, Millennials at age 25 and Generation Z at 18, according to the survey. Today’s retirees began saving for retirement at age 40 on average.

Social Insecurity

Fear that Social Security may not be available for retirement represents a concern across all working generations in the survey, with 71% indicating they are “afraid” it won’t be available when they retire. Just over six in 10 workers (63%) say they would have no idea what they would do if Social Security were not available “when they need it,” a concern that jumps to 71% for current retirees.

Across generations, workers and retirees displayed strong emotions on the issue – as 91% of workers and 94% of retirees say they would feel “betrayed” if the money they paid into Social Security were not available when they retire. Moreover, the survey found that workers have much more faith in their personal savings than in Social Security. Only 55% of retirees have more faith in personal savings than in Social Security, which compares to 79% of workers.

At the same time, workers recognize that retirement is increasingly their own responsibility – but they believe that public policy can still play a role. Ninety percent say that Congress needs to make it easier for workers to have access to tax-friendly retirement plans, and 79% say that companies should automatically enroll new employees in their employer-sponsored retirement plans.

Planning Mindset

Wells Fargo uncovered four specific statements that, when affirmed by workers, correlate with a significantly better financial life, including lower levels of financial stress and better financial well-being. The attitudes and behaviors inherent to the statements contribute to what Wells Fargo calls a planning mindset. These are:

  1. Setting and achieving a goal or set of goals during the past six months to support their financial life.
  2. Working diligently toward a long-term goal.
  3. Feeling better about having finances planned out over the next one to two years.
  4. Preferring to save for retirement now to ensure they have a better life in retirement.

The planning mindset is highest among retirees (42%), followed by Generation Z (40%), Millennials (39%), baby boomers (37%), and Generation X (30%). “By helping investors adopt the behaviors of the planning mindset, the industry can help put more people on the path to a secure retirement,” said Axsater.

Current workers with the planning mindset start saving at a younger age, save more each month for retirement and have saved more for retirement than workers without the planning mindset. Moreover, workers with the planning mindset prioritize saving money for retirement after paying monthly financial expenses (71% versus 53% of those without the planning mindset), say they are in control of or happy about their financial life (82% versus 46%) and are confident they will have enough savings to live comfortably in their retirement years (80% versus 42%).

“Once again, our survey shows that workers and retirees with a planning mindset say they have better outcomes, both in terms of actual income but also in their overall enjoyment of their life and retirement,” said Axsater. “If more workers adopt these behaviors, more retirees should be better prepared for the rapidly changing reality of retirement.”

About The Harris Poll

The Harris Poll is one of the longest running surveys in the U.S. tracking public opinion, motivations and social sentiment since 1963 that is now part of Harris Insights & Analytics, a global consulting and market research firm that delivers social intelligence for transformational times. We work with clients in three primary areas; building twenty-first-century corporate reputation, crafting brand strategy and performance tracking, and earning organic media through public relations research. Our mission is to provide insights and advisory to help leaders make the best decisions possible. To learn more, please visit www.theharrispoll.com

About the Survey

On behalf of Wells Fargo, The Harris Poll conducted 3,918 online interviews of 2,708 working Americans 18-75 or older and 1,004 retired Americans, surveying attitudes and behaviors around planning, saving and investing for retirement. In addition, 206 high-net-worth workers were interviewed (age 18-75, with household investable assets of $1 million or more). The survey was conducted from June 21 – July 17, 2019. Working Americans are age 18-75 or older and working full-time (or at least 20 hours if they are working part-time) or are self-employed. Retired Americans self-identified as retired regardless of age. Both working and retired Americans are the primary or joint financial decision-maker for their household. Data were weighted as needed to represent the population of those meeting the qualification criteria. Figures for education, age, gender, race, ethnicity, region, household income, investable assets, marital status, employment, number of adults in the household, and propensity to be online were weighted where necessary to bring them in line with their actual proportions in the population.

About Wells Fargo

Wells Fargo & Company (WFC) is a diversified, community-based financial services company with $1.9 trillion in assets.* Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, investment and mortgage products and services, as well as consumer and commercial finance, through 7,500 locations, more than 13,000 ATMs, the internet (wellsfargo.com) and mobile banking, and has offices in 32 countries and territories to support customers who conduct business in the global economy. With approximately 261,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 29 on Fortune’s 2019 rankings of America’s largest corporations. News, insights and perspectives from Wells Fargo are also available at Wells Fargo Stories.

*As of September 30, 2019

Wells Fargo Asset Management (WFAM) is the trade name for certain investment advisory/management firms owned by Wells Fargo & Company. These firms include but are not limited to Wells Capital Management Incorporated and Wells Fargo Funds Management, LLC. Certain products managed by WFAM entities are distributed by Wells Fargo Funds Distributor, LLC (a broker/dealer and Member FINRA).
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