When it comes to their current financial savings for retirement and expectations about finances in retirement, the affluent are more prepared than those with lower asset levels. In fact, the median amount already saved for retirement by the affluent is $500,000, which far exceeds the median ($60,000) amount that people with less than $250,000 in assets say they have saved for retirement.A quarter (27%) of the affluent cite healthcare costs as their primary day-to-day financial concern as compared with 16% of those with less than $250,000, who instead say “paying the bills” is their primary concern (43%). The affluent estimate out-of-pocket healthcare expenses in retirement at $60,000 and those with less than $250,000 estimate $49,000. “Although the affluent are more financially prepared for their retirement, both groups have grossly underestimated the healthcare expenses they will need in retirement,” said Wimbish. “They need to be more aware and plan for the real costs of healthcare in retirement.”
|Investable assets <$250,000||Affluent(investable assets $250,000+)|
|Amount saved for retirement (median)||$60,000||$500,000|
|Amount needed for retirement (median)||$400,000||$750,000|
|Estimated out-of-pocket healthcare expenses in retirement (median)||$49,000||$60,000|
|Number of years in retirement (median)||20 years||25 years|
|Withdrawal rate from savings (median)||10%||7%|
|% of current household income needed in retirement (median)||65%||60%|
“The stock market may have felt like a roller coaster for some, but over the long-term, it has been an engine of growth and this has certainly been true in the last four years as we’ve emerged from recession. There is a paradigm shift where you no longer just switch to fixed income ten years before retirement. With increased longevity, there is more time to build assets in a well allocated portfolio and then turn that into retirement income,” added Wimbish.‘Working until 80’ - A Reality for Those with Less Than $250,000 in Assets Working in retirement due to financial necessity will be a reality for a third (34%) of Americans with less than $250,000 in assets, compared to only 9% of the affluent. More broadly, four-in-ten (42%) affluent Americans expect to work because they want to and not out of any financial need, compared to a third (32%) of those with less than $250,000 in assets. Interestingly, about half of affluent men (49%) say they will work in retirement because they want to versus 31% of affluent women. While half (48%) of affluent Americans plan to fully retire and not work, only one third (32%) of those with less than $250,000 in assets believe they will not work during retirement. One quarter (25%) of Americans with less than $250,000 in assets agree they will need to work until they are “at least 80” in order to afford retirement despite the fact that only one-third (36%) think they will be mentally and physically capable of being a productive employee in their 80’s. Conversely, while only 6% of affluent Americans agree they will need to work until they are “at least 80” in order to afford retirement, close to half (43%) expect they will be physically and mentally capable of being a productive employee into their 80’s.
The 401(k), Social Security and Role of IndividualsAbout half of all Americans surveyed view the 401(k) as the best retirement savings vehicle when asked to select from a list of options (52% among affluent; 49% among those with less than $250,000 in assets). Not surprisingly, affluent Americans contribute a higher percentage of their salary (median=12%) to their 401k plan than those with less than $250,000 in assets (median=7%). Additionally, affluent Americans expect Social Security to play a smaller role in their retirement than those with less than $250,000 in assets , who expect Social Security to cover a higher median percentage of their monthly retirement income (median=20% compared to 25%). However, both groups have similar expectations on the following:
- When asked to assign a proportion of responsibility for funding their retirement, the majority (50%) assigned responsibility to the individual through saving and investment, followed by the employer though a pension (25%) and by the government through Social Security (20% by the affluent and 25% for those with less than $250,000 in assets).
- They expect to begin taking Social Security payments at the median age of 65.
- Similarly among those not retired, majorities of affluent (78%) and those with less than $250,000 in assets, (71%) believe they will have the option of delaying the age at which they begin taking Social Security so that they’ll receive higher payments.
- Majorities of the affluent (54%) and those with less than $250,000 in assets (61%) are not willing to take a reduction in their Social Security and/or Medicare benefits even if it would help the country head towards a path to reduce its debt burden.
- Affluent women (45%) are more likely to be willing to take a reduction in their Social Security and/or Medicare benefits than women with less than $250,000 in assets (30%), but there is no such difference among the men in both groups (36/37%).
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, number of adults in the household, and number of phone lines (to adjust for probability of selection) were weighted where necessary to bring them in line with their actual proportions in the population.About Wells Fargo Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.4 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 9,000 stores, 12,000 ATMs, the Internet ( wellsfargo.com), and has offices in more than 35 countries to support the bank’s customers who conduct business in the global economy. With more than 265,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 26 on Fortune’s 2012 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially. About Harris Interactive Harris Interactive is one of the world's leading custom market research firms, leveraging research, technology and business acumen to transform relevant insight into actionable foresight. Known widely for the Harris Poll and for pioneering innovative research methodologies, Harris offers expertise in a wide range of industries including healthcare, technology, public affairs, energy, telecommunications, financial services, insurance, media, retail, restaurant and consumer package goods. Serving clients in over 215 countries and territories through our North American and European offices and a network of independent market research firms, Harris specializes in delivering research solutions that help us - and our clients - stay ahead of what's next. For more information, please visit www.harrisinteractive.com.