Americans are not only worried about the long-term. Short-term concerns also grew in the third quarter with 28 percent of workers and 36 percent of retirees reporting they are pessimistic regarding the economic outlook for the rest of 2011, up from 20 percent for workers and 21 percent for retirees last quarter. Looking beyond 2011, 58 percent of retirees and 46 percent of workers say the economy will worsen in 2012.
“Continued economic challenges have given many pause, signaling we may be a long way from home on the road to recovery,” said Luke Vandermillen, vice president of retirement and investor services at The Principal®. “While many Americans are feeling doom and gloom over the present economy, this is a wake-up call. Those who take steps to save for and protect their financial future may be better prepared to achieve their long-term financial dreams.”
Professional help propels confidence in adequate retirement savings
While long-term financial future may be top of mind, only a quarter (26 percent) of workers say they are saving enough money to live comfortably in retirement. This number increases significantly for those workers who seek the help of a financial professional: 42 percent of workers who use an advisor say they are saving enough money in order to live comfortably in retirement, compared to 22 percent who do not use an advisor.
Workers also report mixed views on how much they need to put away in order to have enough money coming in during retirement:
- 22 percent think they need to save 1-8 percent of their pay (including any employer match)
- 56 percent think they need to save 9 percent or more of their pay (including any employer match)
But in practice, more workers (42 percent) report saving 1-8 percent of their income, including any employer match, than those who say they are saving 9 percent or more (30 percent).
“The disconnect in what people think they should be saving versus what they are actually saving indicates more Americans need to get on track, develop a plan and seek help to start preparing for their retirement,” Vandermillen said. “In order to help ensure sufficient retirement income, we believe most retirement plan participants should be saving 11-15 percent of their pay—including any employer match—throughout an entire working career.”
Fad or fab, online deals and coupons influence how Americans spend
- Thirty percent of workers report making purchases from daily discount websites such as Groupon or Living Social in the past year.
- The top reasons workers are likely to purchase from these websites include getting a good deal (75 percent), purchasing items they would buy anyway at a discounted price (58 percent) or trying out new items/services at a discount (43 percent).
- Coupon clipping is reported by four out of five workers (80 percent). Top coupon-clipping items include food, personal care products, cleaning products and restaurants.
Education expenses pile up for many who struggle to save in the slow economy
- Among workers and retirees who have children that are not already out of school, 39 percent of workers and 26 percent of retirees are saving for their children’s college education.
- Seventy-four percent of workers and 59 percent of retirees report that the economy has made it more difficult to save for their children’s future college education.
- Nearly three quarters of retirees (72 percent) who are saving for their children’s college education are satisfied with their level of savings while only 30 percent of workers who are saving are satisfied.
- For workers, the top reasons for not saving for their children’s college education are finances (53 percent), followed by the expectation their children will pay via student loans (26 percent) or through scholarships (25 percent).