The key differentiator? Those who have sought professional
financial advice feel more confident and prepared for retirement.
MINNEAPOLIS--(BUSINESS WIRE)--
While the difficult economic environment has underscored the need to
plan more diligently, many Americans are failing to take fundamental
steps to prepare for retirement. New findings from the New
Retirement Mindscape IISMstudy,
released today by Ameriprise Financial (NYSE:AMP), indicate that only
half (54%) of pre-retirees have determined the amount of money they need
to save for retirement. Furthermore, while most financial professionals
recommend preparing for a retirement that will last 30 years, survey
respondents estimate theirs will last approximately 20 years – a
significant discrepancy that could leave many dramatically unprepared.
“Given current life expectancies, many people will spend nearly
one-third of their lifetime in retirement,” said Craig Brimhall, vice
president of retirement wealth strategies at Ameriprise Financial.
“Couple this with the potential healthcare costs associated with aging
and it is easy to understand why planning ahead and understanding how
you’ll recreate a paycheck during retirement are so important.”
Some encouraging trends have emerged during the past five years.
Pre-retirees are more likely to be saving for retirement, either in an
employer-sponsored plan or in their own savings or investment account
than they were in 2005 (87% vs. 82%). They are also saving sooner –
nearly 26 years prior to their expected retirement date – more than
three years earlier than they reported in 2005. A similar trend was
reported among retirees – 84% said that they had saved for retirement,
up from 74% in 2005.
Consumers who seek professional financial advice report faring better
The New Retirement Mindscape IIstudy also
illustrates a key differentiator in how people approach retirement.
Pre-retirees with a financial advisor report feeling more positive about
their financial situation and for a good reason – they are taking more
steps to prepare. Compared to their peers without an advisor, they were
more likely to say they are setting aside money in an employer-sponsored
plan (84% vs. 66%) or in their own savings and investments (91% vs.
60%), and to report they have determined the amount of money they need
to save for retirement (68% vs. 44%). This may help explain why they are
also significantly more confident in reaching their retirement goals
(68% vs. 39%).
Retired consumers who have worked with a financial advisor also report
that they’ve taken more steps to prepare than their counterparts.
However, the most significant differences are reflected in the way they
feel about retirement. Compared to retirees without an advisor, those
who have sought professional advice are more likely to feel they are
“living their dream” in retirement (53% vs. 36%) and that their
retirement “worked out the way they planned” (68% vs. 49%).
Confidence and preparation are highest among consumers with a written
financial plan
The survey helped uncover one other key differentiator – a written
financial plan. Consumers who have engaged in a planning relationship
are significantly more likely to feel optimistic about their financial
situation. Compared to those without a written plan, they report feeling
more “on track” for retirement (75% vs. 40%) and “confident in their
financial future” (69% vs. 38%).
Pre-retirees with a written financial plan are also more likely than
those without to feel “confident in reaching their retirement goals”
(72% vs. 38%), possibly because they’re taking action and have more
realistic goals. Compared to those without a plan, more report having
determined the amount of money they need to save for retirement (86% vs.
35%) and the amount of income they’ll need in retirement (85% vs. 35%).
They are also more likely to say they are actively saving than their
peers, including setting aside money for retirement in an
employer-sponsored plan (85% vs. 66%) and in their own savings and
investments (93% vs. 61%).
Among retirees, those with a written financial plan are significantly
more likely than those without to say that their “retirement has worked
out the way they planned” (72% vs. 49%), and that they feel “happy” (86%
vs. 74%) and “enthusiastic” (74% vs. 53%) about retirement. One reason
may be that, in addition to being more financially prepared, retirees
with a plan were more likely to have thought in advance about how they’d
like to spend their retirement years. They had made plans for traveling
(38% vs. 19%), volunteering (27% vs. 13%) and determining their hobbies
(32% vs. 23%). Further, if they had to do it all over again, retirees
with a plan are less likely to say that they would have started planning
and saving for retirement earlier (40%) compared to those without a plan
(61%).
“Seeing Americans begin to take more financial responsibility and save
more diligently is extremely encouraging,” added Brimhall. “The fact
that developing a written plan appears to have a positive impact – both
financially and emotionally – should not be overlooked. If this one
simple step can help people lead a more rewarding and confident
retirement, I believe it’s worth the additional effort.”
The New Retirement Mindscape II study demonstrates that working
with a financial advisor and developing a written financial plan can
help consumers reach this important milestone with more optimism and
confidence. To help consumers start the conversation and take a first
step in planning for retirement and other life events, Ameriprise
Financial has updated its popular Dream Book® guide.
This powerful tool helps people visualize and prioritize their goals,
before they crunch the numbers.
Since the original Dream Book® guide was released in
January 2006, nearly 2.5 million copies have been distributed. Consumers
can contact their local
Ameriprise financial advisor to obtain a copy of the updated guide.
About the study
The New
Retirement Mindscape IISM and New Retirement
Mindscape® studies were commissioned by Ameriprise
Financial, Inc. and conducted by telephone by Harris Interactive in May
2010 and August 2005 among 2,007 (2010) and 2,000 (2005) U.S. adults age
40-75. The sampling error for the 2010 study is +/-2.5%. The 2005 study
was conducted in conjunction with Age Wave and Ken Dychtwald, Ph.D.
About Harris Interactive
Harris Interactive is one of the world’s leading custom market research
firms, leveraging research, technology and business acumen to transform
relevant insight into actionable foresight. Known widely for the Harris
Poll and for pioneering innovative research methodologies, Harris offers
expertise in a wide range of industries. For more information, visit harrisinteractive.com.
About Ameriprise Financial
Ameriprise
Financial, Inc. is a diversified financial services company serving
the comprehensive financial planning needs of the mass affluent and
affluent. For more information, visit ameriprise.com.
Brokerage, investment and financial advisory services are made available
through Ameriprise Financial Services, Inc. Member FINRA and SIPC. Some
products and services may not be available in all jurisdictions or to
all clients.
© 2010 Ameriprise Financial, Inc. All rights reserved.
Source: Ameriprise Financial, Inc.
Contact:
Ameriprise Financial, Inc.
Stacy Housman, 612-678-7215 (Media
Relations)
stacy.m.housman@ampf.com