What’s the price of retirement confidence?

This week we released the 2012 Wells Fargo Affluent Retirement Survey, a survey that helps determine how Americans with $250,000 or more in investable assets are feeling about retirement. On behalf of Wells Fargo, Harris Interactive Inc. conducts various surveys across many
demographics via telephone interviews surveying attitudes and behaviors around planning, saving and investing for retirement. Harris Interactive conducted phone surveys of 1,800 Americans between the ages of 25 and 75, with investable assets either above or below the $250,000 threshold. I always look forward to the results of this survey as it informs our team in Retirement at Wells Fargo how many households are approaching saving for retirement and the way they are (or in some cases, are not!) planning for that phase of life.

So why am I so excited about these numbers? Because these households have not only achieved a significant level of investments, they also feel CONFIDENT that they will have saved enough to live the life they want in retirement - 88% of them! This year’s survey was very interesting on several fronts, and I was encouraged to see some really positive signs among households with investable assets of $250,000 or more, which we refer to as “affluent households.” First of all, 71% of the affluent respondents have written plans, and over half are incorporating detailed calculations about how much income they think they’ll need when they retire. That’s a significantly higher number than we’ve seen in the past several years. And these households are contributing a median of 12% of their income to a 401K plan, with 75% confirming that they are not spending more than they think they should.

So why am I so excited about these numbers? Because these households have not only achieved a significant level of investments, they also feel CONFIDENT that they will have saved enough to live the life they want in retirement – 88% of them! And almost two-thirds report that they have no financial fears concerning their retirement because they have CONFIDENCE in their planning and preparation – that’s twice the level of those who have fewer investable assets.

And just as important, they don’t fear the equity markets as a place to invest retirement assets. As Americans are living increasingly longer, which can extend the time we will spend in retirement, a well allocated portfolio will play an important role in building assets for retirement. Lastly, most of our affluent respondents tell us that they will work in retirement only because they want to.

Do you see the theme running through these answers? It’s confidence and I bleive it comes with discipline around planning, saving, controlled spending, and investing.

But here’s the surprise for me – while we consider these households “affluent” from an asset standpoint, three quarters of those in this group who are still working have a household income of less than $150,000. These households are not the one-percenters or generally considered to be high income earners. And yet they are affluent savers and investors!

The message for all of us, I believe, is that starting to save for retirement with your first job, contributing regularly to a 401K and/or IRA, managing your spending, and completing a written financial plan continue to show us the way to a more confident retirement. So ask yourself this – how many of these characteristics describe me? And if they don’t, what do you need to do to start your journey to a more confident retirement?

This post has been provided for informational purposes only
and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Investing involves risk including the possible loss of principal. Asset allocation cannot eliminate the risk of fluctuating prices and uncertain returns. Since each person’s situation is different you should review your specific investment objectives, risk tolerance and liquidity needs with your financial professional before selecting a suitable savings or investment strategy.

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