Many Near-Retirees Unsure Whether They’ve Saved Enough

March 25, 2021

A new survey reveals that more Americans have made saving a top priority during the pandemic, but also that many aren’t sure whether they’ve saved enough for retirement.  

According to Schroders’ second annual U.S. Retirement Survey, saving for the future is among the top three activities Americans have devoted more attention to since the pandemic began. Overall, activities with increased attention include:

  • Health and fitness (53%)
  • Spending time with family (52%)
  • Saving for the future (39%)
  • What to watch on Netflix and other streaming services (38%)
  • Planning to enjoy life more/bucket list (36%)
  • Developing a financial plan/strategy (29%)
  • Investment portfolio (26%)

And while the findings show that there has been an increased focus on saving, more than one-third of respondents (38%) reported saving less since the start of the pandemic. However, 43% said their savings rate was unchanged and 19% said they are saving more. 

Asked how they felt about the amount of retirement planning they’ve done, just 27% of non-retired respondents said “very good” and they were “fully on track,” while only 18% of non-retired respondents near or at retirement age (60-67 years old) said the same. 

To that end, Schroders notes that this might be why only 26% of non-retired respondents in this age range said they have enough money saved for retirement, yet 60% said they do not have enough saved and 14% did not know if their savings was adequate.

Asset Allocations 

According to Schroders, the lack of certainty in their planning may be affecting how respondents are managing and monitoring their retirement assets, as even younger investors have an abundance of cash and less in equities than older investors. In fact, nearly half (49%) of all respondents said they had no idea how their assets for retirement were allocated, including 59% of women and 51% of non-retired investors between the ages of 60-67.

“Not knowing how your assets are allocated, or holding one-quarter or more of your retirement savings in cash, indicate there may be a need for a greater understanding of how a diversified portfolio could maximize growth while managing risk,” says Joel Schiffman, Schroders’ Head of Intermediary Distribution for North America. Schiffman suggests that the way to improve retirement readiness is through better knowledge, guidance and investment choices. 

The Catch-22

What makes it so hard to plan for retirement properly? The findings suggest that respondents faced three common barriers:

  • I don’t have enough saved yet to plan for retirement (70%)
  • I have other financial priorities that are more important right now (60%)
  • The future is too uncertain to plan for (50%)

“It’s a Catch-22 situation. Investors need a plan to generate enough assets for retirement, but they don’t think they have enough assets to justify a plan,” observes Schiffman. “Planning doesn’t require a lot of assets; it starts with setting a goal and saving toward it by taking advantage of an employer’s defined contribution plan or opening an investment account or IRA,” he notes.   

Asked to describe their financial situation, only 4% of respondents already in retirement said they were “living the dream,” while 42% said they were comfortable. Similarly, a third (33%) of respondents already in retirement said their expenses were higher than expected, including 10% who said, “a lot higher.”

According to the findings, concerns about higher expenses and not having enough saved are shared among both current retirees and non-retired. When asked what they are most concerned about regarding retirement, retired and non-retired respondents pick the same top five issues:

  • Higher health care costs than expected (81%/89%)
  • Health issues draining my savings (76%/81%)
  • A major market downturn significantly redusing my assets (72%/81%)
  • Not being able to afford the lifestyle I desire (67%/80%)
  • Not knowing how to best generate income and/or draw down my assets (66%/80%)

The survey was conducted by 8 Acre Perspective nationwide among 1,000 U.S. consumers ages 45–75 from Jan. 20–27, 2021.