Why is this Topic Important to Wealth Managers? This blogticle presents discussion on the state of affairs of the country’s preparedness for retirement. The low confidence that is reflected in the responses indicates a direct opportunity for wealth managers to assist more individuals.
A recent 2011 annual survey found that the number of investors who are “not at all confident” about having enough money for retirement reached its highest levels in 21 years, representing twenty seven percent of the survey population.  At the same time those who were “very confident” about having enough money for retirement was found to be only thirteen percent. Thus, wealth managers have an opportunity to help those who are not in the thirteenth percentile, or eighty seven percent of investors.
These low responses are surprising given the fact that the report also found sixty eight percent of workers have saved for retirement. In addition, fifty nine percent say they and/or their family are currently saving.
Nevertheless, the report found twenty nine percent of workers report savings levels below $1,000. Moreover, fifty six percent of workers report that the total value of their household’s savings and investments, excluding the value of their primary home and any defined benefit plans, is less than $25,000.
Good news for wealth managers though, the report also found “many workers think they could save more than they are currently saving for retirement.” Around sixty eight percent of all savers and forty eight percent of non-savers believe it is “reasonably possible” for them to start saving more.
Furthermore, the report found “many workers continue to be unaware of how much they need to save for retirement.” An astounding figure, only forty two percent reported they have tried to calculate how much money they will need to save for a comfortable retirement.
The report also found the likelihood of retirement planning calculation increases with household income, education, and other non-savings financial assets. Even for those who make calculations about retirement, the report found amazingly “workers often guess at how much they will need to accumulate.” Forty two percent of workers reported they guessed at the amount they need to save.
Only twenty one percent reported to have asked a financial advisor and an additional twenty one percent reported doing their own estimate. Some rely solely on the scuttlebutt; nine percent reported they rely only what they read or hear is needed. Only five percent reported to fill out a worksheet or form in doing retirement calculations.
The report notes that one possible explanation for the continuing decrease in overall retirement confidence can be attributable to the fact that workers, investor, savors and others “are becoming more realistic about their prospects for a financially comfortable retirement given their current level of retirement preparations.” This realization appears to be consistent across all age levels, not just those nearing retirement. For example, workers in lower age brackets “are statistically no more likely than older workers to state they are not at all confident. “ The report notes, “[t]his might seem counter-intuitive given the positive relationship between age and accumulated savings, but it is likely due to the sizable minority of older workers who have very little savings.”
 See Employee Benefit Research Institute. “The 2011 Retirement Confidence Survey: Confidence Drops to Record Lows, Reflecting ‘the New Normal’”. March 2011. EBRI Issue Brief #355. http://ebri.org/publications/ib/index.cfm?fa=ibDisp&content_id=4772. Last Accessed 3/28/2011.