Although many Americans have focused on saving for the
future during the pandemic, most still have their work cut out for them. In a
recent survey by the investment management firm Schroders, fewer than one in
three respondents described their retirement planning as “very good” or “fully
on track.” The situation is even worse for those nearing retirement age: Only
26 percent of non-retired respondents in this age range said they have enough
money saved for retirement, while 60 percent said they do not have enough saved
and 14 percent don’t know if their savings are adequate.
“The good news is people are focused on saving for the
future even during COVID,” said Joel Schiffman, head of intermediary
distribution, North America, for Schroders. “But the question remains, ‘Will
they have enough for retirement?’ The way to improve retirement readiness is
through better knowledge, guidance and investment choices.”
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. Investors between the age of 45 and 59 report the following asset
allocations:
Equities, 30 percent
Cash, 37 percent
Fixed income, 17 percent
Target date, 15 percent
Other, 11 percent
By contrast, those from 60 to 67 but not retired report this
allocation:
Equities, 35 percent
Cash, 25 percent
Fixed income, 23 percent
Target date, 9 percent
Other, 8 percent
The three most common barriers to proper retirement planning
are inadequate savings (70 percent), more pressing financial priorities (60
percent) and uncertainty about the future (50 percent)
“It’s a Catch-22 situation,” Schiffman said. “Investors need
a plan to generate enough assets for retirement, but they don’t think they have
enough assets to justify a plan. 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.
Every dollar saved and invested is a step closer toward being able to generate
sustainable income in retirement.”
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