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Retirement Fears Jump the Wealth Gap to Strike Many Affluent Americans, Wells Fargo Retirement Study Finds

Twice as many affluent women as men see themselves working until at least age 80

CHARLOTTE — December 14, 2011 - Against the backdrop of public policy debates on the gap between rich and poor, a new survey of affluent Americans from Wells Fargo & Company (NYSE:WFC) shows that many of the affluent are feeling some of the same deep insecurity felt by middle-income Americans about their ability to retire in comfort.
 
“We find the rich versus poor narrative in the U.S. is more complex than we might expect, with fears and concerns about retirement felt along the income spectrum,” said Karen Wimbish, director of Retail Retirement at Wells Fargo. “Even among those considered ‘well off’, many seem to fear a sharp drop in their post-retirement standard of living due to insufficient retirement savings.”

 

Telephone interviews of 801 affluent Americans between the ages of 25 and 75, conducted in August and September 2011 by Harris Interactive on behalf of Wells Fargo Retirement, found:

  • More than one third (37%) say they need to significantly cut back their spending to save for retirement, including nearly half (48%) of those with $100,000 to $250,000 in investable assets.
  • Four in ten affluent Americans (40%) say their biggest fear about retirement is they “will do all the right things today and it still won't be enough for tomorrow” and 9% fear they “will have under saved and won’t recover.”
  • About a quarter of affluent Americans (23%) say they are not confident they will have saved enough for retirement, and this is especially true for Americans with assets between $100,000 and $250,00o (33%), people without a written retirement plan (32%) and women (31%).
  • More than one in five (21%) between the ages of 60 and 75 say they don’t know when they will be able to retire.
  • Nearly one in five (19%) with assets of between $100,000 and $250,000 feel they will need to work until “at least age 80,” a sentiment reported by 25% of middle-class Americans surveyed at the same time. Among all the affluent surveyed, 12% say they will work until 80.
Previous studies have shown that while Americans in their 50s or younger are worried about their ability to retire in comfort, those in their 60s or older feel more secure. A much higher percentage of people above 60 have pensions, and proposals floated in Washington to cut future Social Security or Medicare benefits have avoided changes for those already retired or close to retirement age.
 
“We’ve thought that for the most part today’s retirees felt ‘ok’ with the future, yet here is a whole group of them saying, ‘maybe not,’” Wimbish said.
 
The survey also shows that healthcare costs are a significant concern among affluent Americans with almost a third (28%) saying that paying health care bills is the leading day-to-day financial concern, followed by monthly bills (16%) and saving money for retirement (13%).
 
Women Much Less Confident than Men in Retirement Security
Affluent women surveyed are significantly less confident about retirement than men. The least confident of all are single women, and the most confident are married men.

“Despite the fact that women hold half the high paying managerial positions in the U.S. workforce and they make a majority of household buying decisions, women continue to lag behind men in their confidence in preparing for retirement and this is particularly true for single women,” Wimbish says.
 

  • Twice as many affluent women as men agree they will need to work until age 80 to have enough savings to live comfortably in retirement (18% of women vs. 9% of men).
  • Less than half of women (42%) with investable assets of $100,000-$250,000, say they have a written plan versus 59% of women with assets greater than $250,000.
  • Nearly one third (31%) of affluent women say they aren’t confident they will have enough saved to live the lifestyle they want throughout their retirement, vs. only 18% of affluent men.
  • Single women are the least confident that they will save enough to retire comfortably: 44% said they weren’t confident, compared to 27% of married / partnered women and 17% of married / partnered men.
  • Among affluent women, – who are the lead drivers of America’s consumer economy – two in five (42%) say they need to significantly cut back spending today in order to save for retirement, vs. 34% for men.
  • Asked to name their biggest fear about retirement, 48% of affluent women said they fear they “will do all the right things today and it still won't be enough for tomorrow,” vs. 35% of affluent men. Affluent women are less likely to say they “have no fears, it will work itself out” than men (42% for women, 55% for men).
  • Women are more likely than men to cast aside the idea of a retirement age, with 80% of women vs. 67% of men saying it is more important to have a specific amount saved before retirement, regardless of age, than it is to retire at a specific age, regardless of savings.
Affluent Men Feel More Secure in their Ability to Retire Comfortably:
The affluent men surveyed have saved a median of $400,000 for retirement vs. $250,000 saved by affluent women. Affluent men also say they need more: a median of $750,000 to support themselves in retirement, compared to $500,000 estimated by affluent women.

  • Men are more likely to expect to receive or already receive a pension – 57% of men compared to 47% of women.
  • Men are much more likely to say they’ll work in their retirement years because they “want to” rather than “need to:” 42% of men versus 34% of women. Among those age 40 to 49, half (50%) of men say they will work by choice, versus 39% of women.
Changing Concepts of Aging and Wealth
About three quarters of non-retired affluent Americans (73%) say having a specific amount of money dictates the time of retirement and not the age one reaches, a view held by middle class Americans.
In addition, the idea of amassing savings just to pass it on to heirs is changing, as an emphasis on enjoyment today takes precedence. When affluent Americans were asked if they had enough money for retirement, which is the higher priority; 69% said they would “use the money now to experience with children” versus 22% who said they would save the money to pass on to heirs.
At the same time, only 30% of affluent Americans say they “accept” that they will not leave an inheritance to their descendants because they need to use the money for their own retirement. This acceptance rises to 36% for those with $100,000 to $250,000 in assets and falls to 25% of those with $250,000 or more.
Women are more likely than men to expect they won’t be able to leave an inheritance (35% vs. 26%). This expectation is most common among people in their 50s (38%).
The Third Rail of American Politics? Affluent More Willing to Accept Social Security Cuts
The survey sheds light on what is likely to be one of the most contentious political topics during the coming election year: the degree to which Americans will support cuts in Social Security and Medicare to keep these programs viable into the future and lessen the country’s debt load.
While affluent Americans are slightly more willing than middle-class Americans to take a reduction in these benefits to help the country (47% of affluent vs. 43% of middle-class), among the affluent there is no sharp drop-off among people closer to retirement. Among the middle class, willingness to take cuts plunged from 47% for people in their 40s to 28% for people in their 50s to 19% for people 60 to 75. Among the affluent, the willingness to take cuts was relatively flat at 49% for people in their 40s, 43% for people in their 50s and 44% for people age 60 to 75.
Affluent Republicans (52%) are somewhat more willing than affluent Democrats (46%) to take personal cuts. Other affluent Americans who are more open to benefit cuts include those who have a child under the age of 18 (54%), have investable assets of $250,000 or more (52%), feel confident the stock market is a good place for retirement investments (52%), and are married (50%).
Other Findings: Heavy Reliance on 401(k)s, Lacking the “Right” Written Plan
Among the affluent surveyed, 401(k)s or similar plans represent 42% of household assets. Affluent Americans contribute a median of 10% of their incomes to 401(k) accounts, compared to 6% contributions by middle class Americans.
“The importance of the employer-sponsored plan in helping save for retirement can’t be stressed enough,” Wimbish said. “Many people simply would not have saved as much if it wasn’t for the 401(k).”
Other findings include:
  • Among the affluent, the majority, 54% have a detailed written retirement plan, vs. 30% of the middle class.
  • However, those with a detailed written plan tend to exclude key aspects of their retirement planning such as how much savings will be withdrawn (28%); life expectancy and how long the savings will need to last (30%); and a budget in retirement (34%).
  • Affluent Americans expect to withdraw a median of 8% from their retirement nest egg on an annual basis. Affluent Americans between 50 and 59 project a median withdrawal of 5% as do people in their 60’s. Women between the ages of 60 and 69 say they will withdraw 7%.
  • A slight majority of the affluent (58%) plan to work in their retirement years, vs. 74% of the middle class.
  • Among affluent Americans, 39% will work in their retirement years because they want to, rather than out of financial need, while two in ten will have to work, either to maintain their lifestyle (12%) or to make ends meet (8%).
  • Affluent Americans are divided over their confidence in the stock market as a good place for retirement investments. Those more bullish are men (51%, vs. 42% for women), people who have investable assets of $250,000 or more (56%) versus those with $100,000 to $250,000 (37%), and those with detailed written retirement plans (52%).
 
For help understanding how to prepare for and live in retirement, visit Wells Fargo’s retirement site at
https://www.wellsfargo.com/investing/retirement/ or visit the blog Beyond Today at https://www.wellsfargo.com/beyondtoday/ .
About the Survey
On behalf of Wells Fargo Retirement, Harris Interactive conducted telephone interviews with 801 Americans ages 25 to 75 who owned at least $100,000 in investable assets, excluding real estate and other property. The group was split evenly between those with $100,000 to $250,000 in assets and those with more than $250,000. The survey was conducted between August 11 and September 23, alongside a matching survey of middle class Americans released on November 16.
Data were weighted as needed to represent the population of those meeting the qualification criteria. Figures for education, age, gender, race/ethnicity, region, household income, investable assets, number of adults in the household, and number of phone lines (to adjust for probability of selection) were weighted where necessary to bring them in line with their actual proportions in the population.
About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.3 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 9,000 stores, 12,000 ATMs, the Internet (wellsfargo.com and wachovia.com), and other distribution channels across North America and internationally. With more than 270,000 team members, Wells Fargo serves one in three households in America. Wells Fargo & Company was ranked No. 23 on Fortune’s 2011 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially.
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 including healthcare, technology, public affairs, energy, telecommunications, financial services, insurance, media, retail, restaurant, and consumer package goods. Serving clients in over 215 countries and territories through our North American and European offices and a network of independent market research firms, Harris specializes in delivering research solutions that help us - and our clients - stay ahead of what's next. For more information, please visit www.harrisinteractive.com.

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