2019 Wells Fargo Retirement Study Reveal - Preparing for a 21st century retirement - Wells Fargo Asset ...
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2019 Wells Fargo
Retirement Study Reveal
Preparing for a 21st century retirement
Investment and Insurance Products: NOT FDIC Insured NO Bank Guarantee MAY Lose Value
1
Preparing for a 21st Navigating
century retirement 21st century
challenges
Retirement is the triathlon of financial planning,
testing the endurance of savers over decades.
It takes perseverance and conviction. It calls
for building strengths and developing skills.
It means staying focused and knowing when
to course correct. Adopting
a planning
Findings from our 2019 retirement research
point to a need for better preparation — to work
mindset
smarter, not harder. Today’s retirees are
happier than workers, despite some having an
unmanageable amount of debt and a high level of
financial stress. Even high-net-worth investors
are worried about running out of money.
Our research also reveals an opportunity for
financial advisors and retirement plan sponsors Course correcting
to coach savers toward better outcomes.
as conditions
Providing the right tools, information, and
guidance will help current and future retirees
change
meet retirement goals — making it to the finish
line on their terms.
2
Navigating 21st
century challenges
Going against the tide
Retirement used to be straightforward.
Workers accumulated pension benefits
until they turned 65 and became retirees.
The shift to defined contribution plans plus
longer life expectancy means uncertainty is
now part of retirement planning.
New and soon-to-be retirees are at
the forefront of this shift and are most
vulnerable to running out of savings.
The costs and risks of retirement have
soared, but retirement expectations are
mostly unchanged.
Even current retirees have financial stress,
despite having benefited from investment
tailwinds, Social Security solvency, and
lower longevity risk.
Workers of all ages need to take action now
— to increase the likelihood that they glide
through retirement, not just tread water.
3
Primary source for paying monthly retirement expenses
Retiree Baby Boomer Gen X Millennial Gen Z
401(k) and/or IRA (%) 5 22 41 45 44
Social Security (%) 64 41 21 13 16
Pension plan (%) 22 19 16 12 4
Workers 46% Workers 59% Workers 79%
29 (avg) 40 (avg)
Workers Retirees
Retirees 31% Retirees 44% Retirees 79%
Set the pace
We can improve the outlook for future retirees by focusing on key success factors within our control.
When we start to save How much we save How we invest
4
Adopting a planning mindset
Map the best route
A planning mindset provides a road
map that can help strengthen a
person’s financial future. It adds new
meaning to the belief that
“planning is everything.”
Our research shows this is a powerful
predictor of positive financial
outcomes and personal wellness, we
can strive to get more people into the
planning mindset. All workers should
be able to enjoy the retirement that
they want and deserve — without
worrying about the risk of running out
of money.
5
Four components of a planning mindset Workers with the planning mindset
are more likely to feel they can
More influential 1. “I am able to work diligently toward a long-term goal.”
positively affect these areas.
30%
2. “In the last six months, I have set and achieved a goal or set
of goals to support my financial life.”
Personal debt
of workers feel
3. “I prefer saving for retirement now to ensure I have a better
life in retirement.” personal control
in all four aspects
4. “It makes me feel better to have my finances planned out Financial life
Less influential
in the next 1–2 years.”
35%
of workers have the
Investment
performance
planning mindset
Career
Workers with the planning mindset
nearly nearly
2x
More satisfied
2x
More confident they
2.5x
Have a strong sense
5x
More likely to have
5x
More likely to have a
with their overall will have enough of personal control a plan for handling long-term plan with
financial life saved for retirement over their current the unexpected overarching goals
debt situation 6
Course correcting as
conditions change
Run your own race
Uncertainty means that circumstances
can change before and during retirement,
and people will need to adapt. Projected
retirement income may be lower than
expected — actual life span may be longer.
The last mile could end up being the last 10.
Planning for retirement is a complex
puzzle that calls for a multifaceted and
individualized solution. But generations
have shared experiences that offer clues to
future needs.
7
“I have an unmanageable amount of debt.”
Boomers
Gen X
13% 31%
26% 25% Millennials
Gen Z
“I have no idea what I would do without Social Security in retirement if it wasn’t there.”
Retirees 71%
Boomers 57%
Gen X 66%
Millennials 64%
“I have more faith in my personal retirement savings plan than in Social Security.”
Workers 79%
Retirees 55%
Top three most important items when planning for retirement:
Workers
Making savings last Making the most out
Retirees
through retirement 50% of Social Security 49%
Health care expenses 49% Health care expenses 45%
Estimating my Estimating my
monthly expenses 41% monthly expenses 39%
8
Shifting into high gear
People who have a long-term financial plan and a
contingency plan for when the unexpected happens are
the elite athletes of retirement. Financial advisors and
retirement plan sponsors can help all savers develop
planning skills that are most likely to improve their
financial outlook.
It takes practice to spend less and save more. Starting with
smaller and more achievable steps reinforces the saving
behavior and builds confidence to move to the next level.
• Focus on developing and executing a comprehensive
investment plan.
• Use a goal-based approach with visual tools including
dashboards and personal financial apps.
• Create more personalized communications that are
engaging and target specific actions.
• Add behavioral nudges like automaticity at key inflection
points to help improve success rates.
• Encourage family discussions about money, boosting
confidence and positively impacting relationships.
• Build in annual check-ups to help stay on track.
9
Making it to the finish line
Today’s retirees are living a 20th century retirement
in the 21st century — with predictable pension and
Social Security benefits funding their retirement
years while the expected costs and uncertainty of
retirement climb higher. Tomorrow’s retirees will
need targeted solutions to manage these challenges,
plus the financial stress that goes along with them.
Conducting research into retirement saving
helps us define and create potential solutions that
can make a difference.
Together with financial advisors and retirement
plan sponsors, we can help prepare savers to
achieve long-term financial well-being.
Contact us to continue the conversation:
retirementstudy@wellsfargo.com
10About the survey
On behalf of Wells Fargo, The Harris Poll conducted 3,918 online interviews of 2,708 working Americans age 18–75
and 1,004 retired Americans, surveying attitudes and behaviors around planning, saving, and investing for retirement.
The survey was conducted June 21–July 17, 2019. Working Americans are age 18–75 and working full time (or at least 20
hours if they are working part time) or are self-employed. Retired Americans self-identified as retired regardless of age.
Both working and retired Americans are the primary or joint financial decision-maker for their household. High-net-worth
workers have at least $1 million in household investable assets. Data were weighted as needed to represent the population
of those meeting the qualification criteria. Figures for education, age, gender, race, ethnicity, region, household income,
investable assets, marital status, employment, number of adults in the household, and propensity to be online were
weighted where necessary to bring them in line with their actual proportions in the population.
All investing involves risk, including the possible loss of principal. There can be no assurance that any investment strategy will
be successful. Investments fluctuate with changes in market and economic conditions and in different environments due to
numerous factors, some of which may be unpredictable. Each asset class has its own risk and return characteristics.
Neither Lori Lucas or Employee Benefit Research Institute (EBRI) are affiliated with Wells Fargo.
This information is for educational purposes only and does not constitute investment, financial, tax, or legal advice. Please contact your investment, financial, tax, or legal advisor regarding
your specific needs and situation. The information shown is not intended to provide any suggestion that you engage in or refrain from taking a particular course of action.
Wells Fargo Wealth and Investment Management, a division within the Wells Fargo & Company enterprise, provides financial products and services through various bank and brokerage
affiliates of Wells Fargo & Company. Wells Fargo Asset Management (WFAM) is the trade name for certain investment advisory/management firms owned by Wells Fargo & Company.
These firms include but are not limited to Wells Capital Management Incorporated and Wells Fargo Funds Management, LLC. Certain products managed by WFAM entities are distributed by
Wells Fargo Funds Distributor, LLC (a broker-dealer and Member FINRA).
Brokerage products and services offered through Wells Fargo Clearing Services, LLC, a registered broker-dealer and non-bank affiliate of Wells Fargo & Company.
© 2019 Wells Fargo & Company. All rights reserved 406720 10-19
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