Dan Weil: “Wells Fargo Study: 37 Percent of Middle-Class Americans Say They Never Will Retire” – Money News

Posted on :Oct 24, 2013

By: Dan Weil

Money News

October 24, 2013

Many middle-class Americans apparently aren’t expecting to live their golden  years in leisurely retirement.

A hefty 34 percent of them think they  will work until at least the age of 80, because they haven’t saved enough for  retirement, according to a Wells  Fargo study survey conducted by Harris Interactive.

That’s up from 25 percent in 2011 and 30 percent in 2012.

But 37 percent say they’ll never retire and will work until they are too sick or  die.

What’s the solution to this?

Building savings and creating  a retirement plan can improve the retirements for those now in their working  years, says Laurie Nordquist, head of Wells Fargo Institutional Retirement and  Trust

Meanwhile, a 59 percent majority of the middle class say paying  monthly bills is their chief day-to-day financial concern. That’s up from 52  percent last year.

Saving for retirement takes second place, with 13  percent calling it a priority. Overall, 42 percent say saving for retirement and  paying bills concurrently is impossible.

Thus 48 percent don’t have  confidence that they will be able to save enough for a comfortable  retirement.

The survey of 1,000 middle-class Americans between the ages  of 25 and 75 was conducted July 24 to Aug. 27.

“For the past three  years, the struggle to pay bills is a growing concern, and the prospect of  saving for retirement looks dim, particularly for those in their prime saving  years,” Nordquist says in a statement.

“Having a plan and saving not  only creates more hopefulness, but it produces results that can grow and lead to  a solid retirement.”

In the survey, 52 percent of the middle class say  they are confident they will save enough for retirement. But only 29 percent say  they have a written plan.

Among those who have a written plan, 70  percent feel confident about their retirement, while only 44 percent of those  who don’t have a plan feel confident.

Of those who have a plan, 91  percent say they have willpower to save, compared with 75 percent for those who  don’t have a plan.

In the key 40-to-59 demographic, those who say they  have written a plan also say they have saved $63,000 for retirement, while those  who say they haven’t written a plan say they have saved $20,000.

“This  data so clearly shows what a difference a retirement plan makes in that people  who have a plan have saved three times what those without a plan have saved,”  Nordquist explains. “A plan instills confidence and gives people the discipline  to stick with their objectives and reach their financial goals.”

As for  the respondents who don’t have a written retirement plan, 45 percent say it’s  because they have “so few financial assets.” One-third of the middle class say  Social Security will be their “primary” source of income in retirement.

“People say they don’t have a plan because they don’t have enough money,”  Nordquist notes. “The most important message I can impart about retirement is  that planning is for everyone. It is the foundation for consistent savings,  which can allow people to have the nest egg they will need in retirement and can  also help people determine the role Social Security will play in their  retirement.”

Further, 40 percent say a large unexpected healthcare  expense represents their biggest retirement fear, while and 37 percent list the  loss or reduction of Social Security as fear No. 1.

As for the stock  market, only 24 percent of the middle class view stocks as a good investment for  retirement. Meanwhile, 45 percent say “the stock market doesn’t benefit people  like me.”

A majority (52 percent) say they shun stocks because “I am  afraid to lose my nest egg in the ups and downs of the market.”

Surprisingly enough, fear of the stock market is more intense among those aged  25 to 29, with 56 percent of them afraid they would lose their savings in  equities. Asked what they would do with $5,000 given to them for retirement  investment, 58 percent of people in this age group say they would allocate it to  a saving account or certificate of deposit.

The reluctance for stocks  may stem partly from the fact that 51 percent of the middle class say they have  little interest in learning about investing.

Nordquist is struck by the  fear of stocks. “The middle class just isn’t making the link between being  invested and the potential growth of their savings, but on top of this fear is  apathy. There is no interest in learning more about investing,” she states.

“Fear and apathy are a bad combination, whereas knowledge about saving  and investing is empowering. We’ve got to move people to this mindset.”

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