RETIREMENT SAVINGS: PRIORITIES, STRATEGIES, AND BARRIERS

Transcription

1 RETIREMENT SAVINGS: PRIORITIES, STRATEGIES, AND BARRIERS A Survey for the AARP / Ad Council Saving for Retirement Campaign January 2019 DOI:

2 Table of Contents Introduction 3 Key Findings 5 Detailed Findings 7 Implications 16 Methodology 18 Contact 21 2

3 INTRODUCTION 3

4 Introduction This survey of moderate-income working adults ages was conducted for the AAARP/Ad Council Saving for Retirement Campaign from November 28 through December 5, 2018.* The survey takes a fresh look at recent experiences with and attitudes toward retirement saving including: How many set retirement savings goals in 2018? How many were able to save for retirement in 2018? For those who didn t save or who didn t meet their goals, what were the barriers to saving? What are their savings priorities for 2019, and how does retirement saving compare to other savings priorities? In their lifetime, do they think they re more or less likely to learn that Bigfoot has been confirmed real or save enough for a comfortable retirement? The AARP/Ad Council Saving for Retirement Campaign, which was originally launched in 2017 at AceYourRetirement.Org, offers a quick and easy retirement planning resource in just about three minutes, users can chat with a friendly digital retirement coach, Avo, to get their personalized action plan. *The survey sample included 1,611 employed adults ages with household incomes from $40,000 to $99,999. For more information about the sample, see the Methodology section. 4

5 KEY FINDINGS 5

6 Key Findings Fewer than half (47%) of moderate-income working adults ages say retirement is one of their top three savings priorities for When asked for their #1 savings priority for 2019, respondents most commonly cite paying off debt (33%), followed by saving for retirement (21%). Nearly 3 in 10 (28%) think they re more likely to learn Bigfoot is real than to save enough for retirement. Seven in ten (69%) saved at least some money for retirement in Four in ten (40%) set a retirement savings goal in Those who set retirement savings goals were more likely to save than those who did not set goals. Of those who set a retirement savings goal, 84% were able to save some money for retirement in Of those who did not set a goal, just 60% saved some money for retirement. Among those who saved for retirement last year, nearly half (48%) set a retirement savings goal. Other strategies used by retirement savers last year include: Increasing contributions to their employer-sponsored retirement plan to get the full match (27%) Putting extra income, raises, or bonuses directly into retirement savings (18%) Cutting back on everyday expenses and spending (17%) 6

7 DETAILED FINDINGS 7

8 More Than Half Cite Paying Off Debt Among Their Top Three Savings Priorities for 2019 The focus on paying off debt is particularly high among women (60% vs. 51% among men). Overall, building retirement funds is on par with setting up an emergency fund in terms of top three 2019 priorities. Adults ages are especially likely to be focusing on their retirement fund (58% vs. 37% of adults ages 40-49). Paying off a significant debt, such as a credit card, student loan, or mortgage Building up my retirement fund Building up my emergency fund 47% 46% 55% Paying Off Debt 60% Home repairs/improvements Vacation/travel 30% 39% 51% Buying a car My children's college expenses Buying a home None of these 16% 13% 10% 7% Building Retirement Fund Age % Age % Q1. Of the following items, which, if any, are your top savings priorities for 2019? Please rank your top three priorities, where 1 is your top priority. [Chart displays percentage of respondents who selected each item as priority 1, 2, or 3.] Base: Full Sample (1,611 employed adults ages with household incomes from $40,000 to $99,999) 8

9 The #1 Savings Priority Highlights Focus on Paying Off Debt Adults age (29%) are more than twice as likely as adults ages (13%) to identify building a retirement fund as their #1 savings priority. Among those ages 50-59, paying off debt (31%) and building up a retirement fund (29%) are nearly tied for the most common #1 savings priority. Paying off a significant debt, such as a credit card, student loan, or mortgage Building up my retirement fund 21% 33% Building Retirement Fund Age % Building up my emergency fund 11% Age % Home repairs/improvements 9% Vacation/travel Buying a home Buying a car 4% 5% 5% Ages Paying off a significant debt 31% Building up my retirement fund 29% My children's college expenses 4% Q1. Of the following items, which, if any, are your top savings priorities for 2019? Please rank your top three priorities, where 1 is your top priority. [Chart displays percentage of respondents who selected each item as priority 1.] Base: Full Sample (1,611 employed adults ages with household incomes from $40,000 to $99,999) 9

10 Meeting Basic Expenses Was the Main Barrier to Saving for Retirement Among those who did not save for retirement in 2018 or did not save enough to meet their 2018 goal, taking care of here-and-now expenses represented the main barrier to saving. Barriers to Saving for Retirement I did not have enough left over after basic expenses (e.g. housing, food) 53% Unexpected expenses came up 37% My savings priorities changed 10% I just never got around to it 7% I wasn't sure what steps to take next 3% None of these 10% Q5. What was the primary reason you weren t able to save for retirement, or weren t able to save as much for retirement as you wanted to, in 2018? Base: Employed adults ages with household incomes from $40,000 to $99,999 who did not save money for retirement in 2018 or did not save enough to meet their 2018 goal. (n=667) 10

11 Most Were Able to Save for Retirement in 2018 Seven in ten (69%) were able to save some money for retirement in 2018, climbing to three-quarters among higherincome households. Were you able to save any money for retirement in 2018? No, 30% Household Income $40,000 - $74,999 $75,000 - $99,999 Yes 66% 75% Yes, 69% Q2. Were you able to save any money for retirement in 2018? Base: Full Sample (1,611 employed adults ages with household incomes from $40,000 to $99,999) 11

12 Those Who Set a Retirement Savings Goal Were More Likely to Save In all, four in ten (40%) respondents set a goal related to saving for retirement in More than eight in ten (84%) of those who set a retirement savings goal last year actually saved some money for retirement in 2018, compared to just six in ten (60%) of those who did not set a goal. How many set a retirement savings goal in 2018? Were you able to save any money for retirement in 2018? Those Who Did NOT Set a Retirement Savings Goal (n=962) 60% 40% Yes, 40% No, 60% Those Who Set A Retirement Savings Goal (n=639) 84% 16% Base: Full Sample (1,611 employed adults ages with household incomes from $40,000 to $99,999.) Charts display calculations from the following questions: Q3a. (asked of retirement savers). Which of these statements best describe you?: This past year, I set a goal related to saving for retirement and successfully reached my goal. This past year, I set a goal related to saving for retirement, and although I did not reach my goal, I was able to save for retirement. This past year, I did not set a goal related to saving for retirement, but I did save for retirement.; Q3b. (asked of those who did not save for retirement in 2018). Which of these statements best describe you?: This past year, I set a goal related to saving for retirement but was not able to save anything for retirement. This past year, I did not set a goal related to saving for retirement, and I did not save for retirement. Yes No 12

13 Retirement Savers Focus on Getting Their Employer s Full Match, Putting Away Extra Money for Retirement, and Reducing Expenses Nearly half (48%) of those who saved for retirement in 2018 set a retirement savings goal last year. Other steps that retirement savers took in 2018 to help themselves save included increasing their contribution to their employer-sponsored plan in order to qualify for their employer s full match, putting extra income directly into their retirement savings (18%) and reducing expenses and spending so that they could increase their retirement savings contributions (17%). How many retirement savers in 2018 set a goal? Did NOT set a goal, 52% Set a goal, 48% Strategies Used to Save for Retirement I increased my contribution rate to my employer-sponsored retirement plan so that I could get the full amount that my company matches I got a raise, bonus, or extra income and put all or some of it directly into my retirement savings I reduced my everyday expenses and spending so I could increase my contributions to my retirement savings account I maxed out my contributions to my retirement accounts to the full limit allowed by the IRS. I made additional 'catch-up' contributions to my retirement accounts as allowed by the IRS (50+ only; n=681) I set up for the first time automatic transfers from my paycheck or bank account to my retirement savings I rolled over an old retirement plan (like 401(k) or 403(b) into my IRA or my new employer's plan 6% 10% 9% 8% 18% 17% 27% Pie Chart displays calculations from Q3a. Base: Employed adults ages with household incomes from $40,000 to $99,999 who saved for retirement in (n=1186) None of these Bar chart displays responses to Q4. What did you do in 2018 that helped you save for retirement? Base: Employed adults ages with household incomes from $40,000 to $99,999 who saved money for retirement in 2018 (n=1186) 33% 13

14 For Nearly 3 in 10 (28%), the Likelihood of Bigfoot Being Confirmed Real Seems Higher than the Likelihood of Saving Enough for a Comfortable Retirement. Adults with lower household incomes were more likely than those with higher incomes to feel this way (31% of those with incomes from $40,000 to $74,999, compared to 25% of those with incomes from $75,000 to $99,999). It s More Likely That... Bigfoot will be confirmed real 28% 7% 65% Disco will come back in style 37% 5% 58% An astronaut will walk on Mars 40% 6% 54% I will save enough to retire comfortably I will get a personal robot assistant 30% 7% 63% I will run a marathon 30% 7% 63% Selected Red Scenario Refused I will save enough to retire comfortably Q6. Within my lifetime, it s more likely that Base: Full Sample (1,611 employed adults ages with household incomes from $40,000 to $99,999) 14

15 Volunteering Ranks High in Interest if They Were to Retire in 2019 There is interest in enjoying the outdoors while unplugging from technology (15%) A smattering of new learnings and experiences round out retirement interests Volunteer for a good cause 21% Unplug' from technology for a month and enjoy nature 15% Ride a motorcycle across the country 7% Learn a new language Write a novel Start a charitable organization Go skydiving Open a Bed & Breakfast Train to run a marathon Cook every recipe in my favorite cookbook 5% 4% 3% 2% 2% 2% 2% None of these 37% Q7. If you could retire in 2019, which of the following would you most want to do next? Base: Full Sample (1,611 employed adults ages with household incomes from $40,000 to $99,999) 15

16 IMPLICATIONS 16

17 Implications Moderate-income working adults ages face a variety of financial pressures, including the challenge of covering basic expenses and unexpected expenses as well as paying off significant debts. As a result, building a retirement fund often takes a back seat to more immediate financial needs. However, despite these challenges, most adults in this age group were able to save something for retirement last year. The survey suggests that the mere act of setting a retirement savings goal may be an important step in getting people to focus on the longer-term and save for retirement. Other strategies that appear useful include putting part or all of bonuses or extra income directly into retirement savings accounts and reducing everyday expenses and spending. Although many face competing financial demands that may interfere with retirement savings, these survey results suggest that certain behaviors along with goal setting may hold promise for building retirement saving. 17

18 METHODOLOGY 18

19 Methodology Objectives: To explore the steps that moderate-income working adults ages took in 2018 to save for retirement, as well as the role of goal setting and the barriers to building retirement savings. Methodology: Online survey via the Ipsos KnowledgePanel, with sample targeting panelists age Qualifications: Age 40-59; employed; household income of $40,000 to $99,999. Sample Size: n=1,611. Interviewing Dates: November 28-December 5, Weighting: The data is weighted by gender, age, race/ethnicity, education, region, income, and metro area to be nationally representative of employed adults ages with household incomes of $40,000- $99,999. Questionnaire length: Overall: 5 minutes (median); Confidence Interval: Total sample: +/ percentage points 19

20 About AARP AARP is the nation s largest nonprofit, nonpartisan organization dedicated to empowering Americans 50 and older to choose how they live as they age. With nearly 38 million members and offices in every state, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, AARP works to strengthen communities and advocate for what matters most to families with a focus on health security, financial stability and personal fulfillment. AARP also works for individuals in the marketplace by sparking new solutions and allowing carefully chosen, high-quality products and services to carry the AARP name. As a trusted source for news and information, AARP produces the nation's largest circulation publications, AARP The Magazine and AARP Bulletin. To learn more, visit or on social media. About The Ad Council The Ad Council brings together the most creative minds in advertising and media to address the most worthy causes. Its innovative, pro bono social good campaigns raise awareness. They inspire action. They save lives. To learn more, visit AdCouncil.org, follow the Ad Council s communities on Facebook and Twitter, and view the creative on YouTube. 20

21 S. Kathi Brown, AARP Research For media inquiries, please contact This research was designed by the Ad Council and AARP. 21