Wary of Social Security’s Future, Young Workers Turn to Advisors
A new study reports that Americans are more committed than ever to save money for their retirement, and with Millennials and Gen Xers expressing record levels of concern about the future of Social Security, more workers are feeling like they have no other option.
Over the winter, Transamerica, in conjunction with Harris Interactive, interviewed via the Internet 4,550 American adults working full- or part-time for their 16th Annual Transamerica Retirement Survey of Workers study. They found that young and middle-aged workers, even those not affected directly by the recession, are trying to save as much as they can, and that many of them worry that they will have to continue working long after age 65.
The study makes the case that many workers worry about their retirement status because they don’t actually know what level of savings would ever make them feel comfortable. To that point, over half of respondents (53%) said they guessed how much money they would need to retire comfortably. An additional 20% estimated their goal based off their current living expenses, while omitting new financial pressures that come with aging. Just 10% of all respondents, nearly identical across age groups, said they have used a retirement calculator.
Just 35% of respondents say they use a financial advisor to help them manage their savings, including a mere 29% of those between the ages of 40 and 49. Workers over 60 were most likely to use an advisor, but still less than half (49%) report using one. Interestingly, workers in their 20s (32%), 30s (34%) and 50s (36%) have near-identical advisor-use rates.
In addition, less than half (42%) of workers say they have a retirement strategy, and just 14% of Americans report having a plan that is actually written down. As with the financial advisor use, workers in their 40s have the lowest rates of written-plan use, at just 9%. Those Gen Xers, who are most likely to have financial dependents and credit card debt, are also the most worried about ever getting to retire — 61% percent say they expect to work past age 65 or not fully retire at all.
And while 69% of all workers expect Social Security to make up part of their retirement income (the most-cited expected source of funds), just 32% of those in their 20s expect it to be around when they stop working. However, they are the age group most likely to use a financial advisor to help them calculate their retirement savings goal, showing the importance that younger Americans put on saving for retirement on their own.