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Retirement Planning - US - May 2015

"There is a retirement planning crisis in this country. Whether because they can’t, they don’t know how, or they don’t know they should, people are not saving what they will need even to be sure they won’t outlive their savings. Tools are available to help, but many people don’t utilize them. There is opportunity for financial institutions and advisers in the retirement planning market, but educating people has to be part of the process. Doing that, however, requires resources as well as the willingness to work with clients who may not fit the typical profile of advice clients. This report examines some of the factors behind this crisis, as well as some steps institutions and advisers can take to help consumers save the money they need to enjoy the retirement they want. "
- Robyn Kaiserman, Financial Services Analyst

This report discusses the following key topics:

  • People are not saving enough for retirement
  • Women have saved less than men
  • Lack of retirement planning education

People are living longer, healthier lives but not saving the money they need to ensure they can enjoy those lives. Even among those who are saving money, many are not saving enough and stand to experience a shortfall when the time finally comes to retire. Although Social Security is available now, its future is uncertain and many current recipients find the payments are often not enough to support them, anyway.

Much has been written about this issue, and as awareness of the problem has increased, so has the availability of assistance, whether by financial advisers or online tools offered by financial institutions. Especially now that Baby Boomers are beginning to retire, advisers are – and will continue to be –reaching out to work with them to devise the income distribution strategies that will fund them throughout retirement. People who are comfortable with online tools, such as many Millennials and Gen X, will have more at their disposal, either as a substitute for or complement to personal financial advisers. Employers that offer employer-sponsored plans are also looking to partner more closely with their plan providers so their employees will be more comfortable with their plans and make retirement savings and investment decisions that are best for them. As more employers, plan providers, financial institutions, and financial advisers become proactive in helping people save as much as they can, they will not only gain additional – and more loyal – clients and employees, but also help those clients and employees get into position to enjoy a comfortable retirement.

 

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Table of contents

  1. Overview

    • What you need to know
    • Executive Summary

        • The issues
          • People are not saving enough for retirement
              • Figure 1: Amount in retirement savings, by household income, January 2015
              • Figure 2: Amount in retirement savings, by generation, January 2015
            • Women have saved less than men
              • Figure 3: Amount in retirement account, by gender and age, January 2015
            • Lack of retirement planning education
              • Figure 4: Concerns about retirement saving, January 2015
            • The opportunities
              • Increasing number of single people
                • Figure 5: Ownership of retirement account, by marital status, January 2015
              • Advisers can step in
                • Figure 6: Steps taken toward retirement planning, by generation, January 2015
              • What it means
              • The Market – What You Need to Know

                • Retirement assets are at a record high
                  • IRAs are the largest segment of the market
                    • The number of people with a retirement plan is growing
                      • Workers and retirees are more confident
                      • Market Size

                        • Retirement plan assets reach $24.7 trillion
                          • Figure 7: Total US retirement plan assets, 2007-14
                      • Market Breakdown

                        • IRAs comprise largest segment
                          • Figure 8: US retirement plan assets, by segment, 2012-Q4 2014
                        • IRA assets
                          • Figure 9: IRA assets, selected years 1995-2013
                        • 401(k)s are growing in importance
                          • Figure 10: Defined Contribution Plan Assets, by type of plan, selected years, 1995-2013
                      • Market Perspective

                        • 401(k) balances are up
                          • Worker confidence is inching back
                            • Figure 11: Worker confidence in having enough money to have a comfortable retirement, selected years
                          • Retirees are also more confident
                            • Figure 12: Retiree confidence in having enough money to have a comfortable retirement, selected years
                        • Market Factors

                          • Life expectancy
                            • Figure 13: US life expectancy, for infants born in 1980-2012
                          • Consumer savings
                            • Figure 14: US personal saving rate, February 2005-February 2015
                          • Unemployment rate
                            • Figure 15: US unemployment rate, January 2012-March 2015
                          • Access to employer-sponsored plan(s)
                            • Figure 16: Percentage of US workers who have access to and participate in an employment-based retirement plan, 1987-2013
                        • Key Players – What You Need to Know

                          • Fidelity is the leader
                            • More employee education is needed
                              • Automatic enrollment and escalation aid tremendously
                                • The government is getting involved
                                • What’s Working?

                                  • Fidelity is a leader in workplace education
                                      • Figure 17: Fidelity workplace education ads, 2015
                                    • Employers are increasing their assistance
                                      • Figure 18: Principal direct mail ad, 2015
                                    • Automatic enrollment/automatic escalation
                                    • Who’s Struggling?

                                      • More retirement planning education is needed
                                        • Figure 19: Concerns about retirement savings, by gender, generation, January 2015
                                    • What’s Next?

                                      • myRAs
                                        • New regulations may come
                                        • The Consumer – What You Need to Know

                                          • Most people have a retirement account, but some segments are behind
                                            • Women lag men in retirement preparedness
                                              • Education and engagement are key
                                              • Retirement Plan Ownership

                                                • Most consumers have some type of retirement plan
                                                  • Figure 20: Retirement plan ownership, any retirement plan, January 2015
                                                • Only half of single people have a plan
                                                  • Figure 21: Retirement plan ownership, any retirement plan, by marital status, January 2015
                                                • Plan participation is low among Hispanics and Blacks
                                                  • Figure 22: Retirement plan ownership, any retirement plan, by race and Hispanic origin, January 2015
                                              • How Much Do They Have?

                                                • How much they have
                                                  • Figure 23: Amount in retirement savings, January 2015
                                                • Women are behind
                                                  • Figure 24: Amount in retirement account, by gender, January 2015
                                                • Geographical region matters
                                                  • Figure 25: Amount in retirement account, by region, January 2015
                                              • Retirement Planning Steps Taken

                                                • Retirement planning steps already taken
                                                  • Figure 26: Steps taken toward retirement planning, January 2015
                                                • Men are more likely to do own research
                                                  • Figure 27: Steps taken toward retirement planning, by gender, January 2015
                                                • Consumers look for adviser at $250K
                                                  • Figure 28: Steps taken toward retirement planning, by amount in retirement account, January 2015
                                              • Why No Adviser

                                                • Young women are not focused on retirement
                                                  • Figure 29: Reason for not using a financial adviser, by gender and age, January 2015
                                                • Household income helps determine timing for advice
                                                  • Figure 30: Reasons for not using a financial adviser, by household income, January 2015
                                                  • Figure 31: Wells Fargo retirement advice direct mail ad, 2015
                                              • Reasons for Not Starting to Plan

                                                  • Figure 32: Reasons for not starting to plan, January 2015
                                              • Attitudes toward Retirement

                                                • Few are confident, yet few are prepared
                                                  • Figure 33: Attitude toward saving for retirement, January 2015
                                                • Millennial men are taking steps; Millennial women are not
                                                  • Figure 34: Attitude toward saving for retirement, by gender and age, January 2015
                                              • Retirement Saving and Investing Behavior

                                                  • Figure 35: Retirement saving and investing behavior, January 2015
                                                • Few actively manage their retirement accounts
                                                  • Figure 36: Retirement saving and investing behavior, by household income, January 2015
                                                • Consumers with large retirement accounts behave differently
                                                  • Figure 37: Retirement saving and investing behavior, by amount in household’s retirement account(s), January 2015
                                              • Retirement Saving Concerns

                                                • Most don’t understand their plan
                                                  • Figure 38: Top five concerns about retirement saving, by level of agreement, January 2015
                                                • Many young people would welcome help
                                                  • Figure 39: Concerns about retirement savings, by generation, any agree, January 2015
                                              • CHAID Analysis

                                                  • Opportunities for advisers
                                                    • Hispanic Millennials
                                                      • Figure 40: Concerns about retirement saving – CHAID – Tree output, January 2015
                                                    • Non-Hispanic Male Millennials
                                                      • Figure 41: Concerns about retirement saving – CHAID – Tree output, January 2015
                                                  • Appendix – Data Sources and Abbreviations

                                                    • Data sources
                                                      • Consumer survey data
                                                        • Abbreviations and terms
                                                          • Abbreviations
                                                            • Terms
                                                            • Appendix – CHAID Analysis Methodology

                                                                • Figure 42: Concerns about retirement saving – CHAID – Table output January 2015

                                                            Companies Covered

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                                                            Retirement Planning - US - May 2015

                                                            £3,277.28 (Excl.Tax)