Disturbing Trends

So I came across a very interesting study done by Wells Fargo back in 2010 about retirement planning and savings. I will include a link below to the study and recommend you take a look at it. The main idea that I gleaned from the study was the fact that Americans don't have a clue about retirement planning. I would go even so far as to call them delusional and irresponsible. The study really did show some alarming trends, especially when it came to my age bracket, the 20-somethings.

First and foremost the study shows a lack of planning, 71% didn't have a plan for their life expectancy and how long their retirement savings needed to last! Those in the 20-something bracket showed an expected lack of interest in retirement planning all together. This frankly didn't surprise me at all based off conversations I have had with friends and others in my generation. (Your whole life is in front of you, why starting worrying about all that now?) I was relieved though to find that a majority of 20-somethings do not think social security would be much help by the time they reach retirement age. So at least we are not completely delusional. The study also showed that my generation has a diminished view of investing in the market. When asked what they would do if given $5,000 for retirement, most said they would put it in the bank, or a CD. Wells Fargo aptly points out that at the rate CDs, and savings accounts pay out in interest it would be pretty much impossible to keep up with inflation and grow that money enough to support a healthy retirement.

Secondly, I took from the study the idea that many Americans do not understand how much is needed to retire with the standard of living they expect to enjoy in retirement. They simply are unaware of how much they need to save and grow that money to retire, and how much to withdraw when they finally do enter retirement. Health care is of course extremely expensive, especially as you get older. The average amount 20-somethings expect to pay for health care in retirement: $87,400. Wells Fargo cited a recent study that concluded that a 65-year-old couple retiring in 2010 would need about $200,000 for out of pocket medical expenses in retirement. That is a huge difference, $112,600 to be exact! After reading all of this I am left with the impression that perhaps classes in financial planning and retirement should be taught in high schools and/or made requirements for college degrees. You don't have to understand everything but should at least understand the basics! When and If Social Security and Medicare is bled dry what are people going to do?

Like I said earlier, check out this study, its a quick read. I focused more on the 20-somethings because that's my group but they have it broken out for everyone. Take a look at your age group and see where you stand in comparison. The saddest statistic in the study: The median retirement savings of respondents age 50 to 59...$29,000. 


https://www.wellsfargo.com/downloads/.../2010-retirement-study.pdf