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Small Steps Can Have a Large Impact on Retirement Saving

Retirement readiness remains a significant issue, but making a few small, smart investments like taking advantage of an employer 401(k) match can have a major impact over time, according to BlackRock’s 6th Annual Global Investor Pulse Survey.

In this year’s study, which spanned 27,000 people in 13 countries, including more than 4,000 in the U.S., just 56% of all respondents say they have started to save for retirement and only 45% of them feel confident that they’ll achieve their “ideal retirement.”

Among the reasons, respondents say they are “too worried about their current financial situation,” citing high cost of living (56%), health care costs (49%) and rising prices (34%) as the greatest pressures. Equally concerning, according to BlackRock, is that fewer than half (44%) of U.S. respondents say they have any market-based investment holdings at all.

Investor Angst

While money was ranked as the number one source of stress among respondents overall, Millennials – representing a third of the U.S. workforce – reported worrying about their finances more than any other age group.

More than half (58%) said that they are too worried about their current financial situation to think about their future. What’s more, 77% feel there are too many investment options to choose from and 6 in 10 said they don’t know where to go for retirement planning advice.

There is hope, however. Those respondents who plan for retirement proactively tend to be more content with their lives and have a greater sense of personal well-being. According to the study, Americans with a retirement savings plan are more likely (78%) to have a higher level of overall well-being than those without one (52%). Those with a higher sense of well-being are also four times more likely to feel confident about their retirement income (66% versus 17%).

“Much as physical exercise has both short- and long-term benefits, focusing on retirement planning helps alleviate stress and improves your overall well-being today. Saving for your future retirement pays immediate emotional benefits,” notes BlackRock President Robert Kapito.

A large cohort of women, however, appear to be missing out on the benefits of investing. While those who have a retirement plan report a higher well-being (76%) compared to those who do not (53%), only half (52%) of U.S. women have started to save for retirement at all.

For 64% of this group, just the thought of investing is a source of stress, compared to 50% of U.S. men, BlackRock notes. And U.S. women who do invest take a more cautious approach, according to the study, with only 38% willing to increase their investment risk to achieve higher returns, compared to 56% of men.

Easy-to-Use Solutions

For many people, getting started is the hardest part, the study notes. BlackRock suggests that easy-to-use investment solutions could help alleviate both financial and emotional barriers that many have in engaging with retirement planning.

Among those who have started investing, 7 in 10 U.S. respondents said new technology solutions would help them be more involved in their investments. In addition, more than 80% of respondents who work with a financial advisor reported a high sense of well-being, compared with 61% of those who don’t.

The study also finds that 30% of non-investors want a way to try out investing with a low money commitment.