More than losing their job, public speaking, weight gain, or a trip to the dentist, Americans stress most running out of money in retirement.
More than losing their job, public speaking, weight gain, or a trip to the dentist, Americans stress most running out of money in retirement, according to a new Bank of America Merrill Edge Report. But as stressful as the prospect of outliving one’s savings is, the report finds that many are unwilling to cut back spending on indulgences to invest for retirement.
The bi-annual survey of non-Millionaire households with between $50,000 and $250,000 in investable assets detects a “live for today” mindset that puts saving for retirement on the back burner in favor of maintaining discretionary spending habits.
On the plus side, nine-in-ten of non-Millionaires surveyed for the Merrill Edge Report do set a household budget, but two-thirds of them self-report being unable to consistently stay within its parameters. Paying off debts (31 percent) and unexpected expenses (33 percent) are the most cited obstacles to saving for retirement.
But when it comes to their own daily financial management, having enough to live comfortably “in the here and now” (63 percent) is a higher priority than getting the most out of their investments (49 percent) or saving for the future (48 percent). They are unwilling to spend less on entertainment (34 percent) or eating out (30 percent).
Women more than men are stressed about outliving their retirement savings (59 percent vs. 51 percent), the report finds. Across the generations, Gen Xers and Baby Boomers (61 percent each) fear most a financially uncertain retirement compared with 51 percent of Millennials.
Admirably, nearly seven-in-ten parents surveyed cut back on their own spending to help their children. Almost half (45 percent) spend less on vacations or are eating more at home rather than going out. More than one-third (35 percent) have withdrawn from their own savings/investment accounts to cover their children’s expenses.
Their children’s or grandchildren’s financial situation is a primary concern for a majority (58 percent) of non-Millionaires surveyed by Spectrem’s Millionaire Corner. Six-in-ten baby boomers ages 55-64 express this concern.
If Millennials are not as stressed over retirement as their older counterparts it is partly an age factor, but also a matter of planning. The Merrill Edge Report finds that Millennials are planning for their future at a much younger age, with 54 percent starting between the ages of 18-24. Eight-in-ten Millennials report having retirement savings. More Millennials (36 percent) than Baby Boomers (15 percent) and seniors (12 percent) were motivated to save for retirement when they started their first jobs, the report finds.
Related story: Interview with Gail MarksJarvis, author of "Saving for Retirement"
Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.
A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.