Creating a plan for retirement can lead to a greater sense of confidence and control, but a new study suggests that a surprising percentage of the general population hasn’t even considered doing so.
In fact, while many say they’ve “thought about it,” only 18% of respondents have created a comprehensive written plan for their retirement, according to Fidelity Investments’ new “Retirement Mindset Study,” which examines the different attitudes Americans have toward retirement.
Of those who say they have not created a written retirement plan, the number one reason is “I’ve never thought of having to prepare a plan” (23%), followed by “I don’t know where to begin” (22%) and “I feel like I am too far behind for it to make a difference” (20%).
According to Fidelity, the findings suggest there is an opportunity for those who are simply thinking about it to take the first step toward more mindful planning – a good starting point in establishing habits that can eventually develop into a more disciplined approach for the long term.
This lack of planning cuts across generations, too. Nearly four out of five Baby Boomers (79%) don’t have a written financial plan for retirement, which Fidelity contends is alarming given that this generation stands at the door of retirement, if they haven’t already retired. Boomers are not alone, however, as the large majorities of those belonging to other generations – Millennials (87%) and Generation X (81%) – also have not created a plan.
Many respondents also admit to worrying about uncertainties related to their lifestyle in retirement, causing them to question whether they’ll be able to live the life they want. When asked which of the lifestyle “what ifs” worry them most, concerns related to their personal finances emerge as a common theme. “Having to downsize my home or move due to high cost of living,” “adjusting my lifestyle to fit a fixed income” and “outliving my assets” make up 49% of respondents’ main worries, with the fear of outliving their assets as the single largest concern at 24%.
Taking Control
Not surprisingly, the study shows that putting a plan in place helps provide people with an increased feeling of confidence and control. When asked how having a written retirement plan in place made them feel, 49% of those who have one in place say they feel “in control.” Moreover, 43% of respondents say they feel good about themselves, while 30% feel relieved; only 10% say they are “still stressed.”
What’s more, only 4% of people with a comprehensive written financial plan say they haven’t yet gained control over their finances for retirement, compared to 30% of those without a plan.
The key is to not become overwhelmed. “We know many people feel overwhelmed by the prospect of creating a plan for retirement. The good news is you don’t have to be a great planner or take giant leaps to get started,” explains Melissa Ridolfi, vice president of college and retirement leadership at Fidelity Investments.
“Estimating how much one might need in retirement and whether they’re on track to be able to cover those expenses is a good first step,” Ridolfi suggests. “From there, consider current savings habits and investing strategies to help close any gaps over time. Taking these steps can go a long way toward providing clarity and, ultimately, a greater sense of control and peace of mind,” she says.
The findings in Fidelity’s study are based on an online survey consisting of 1,429 adults, 23 to 74 years of age and older, conducted between Feb. 25, 2019 and March 2, 2019, by Brookmark Research Services.
