Data and Research

Short-Term Optimism Can Benefit Retirement Planning

Most are confident the economy will improve this year, but the majority would like more help with long-term financial planning.

By Javier Simon editors@strategic-i.com | April 10, 2017

Although most Americans feel financially secure for the near future, they feel less optimistic about long-term planning, according to a recent survey by Northwestern Mutual. 

Less than half (48%) say the American Dream is attainable today, a drop from 58% reported in 2009, when the firm conducted its first survey in this area.

"It appears we're at a financial flashpoint in America," suggests Rebekah Barsch, vice president of planning at Northwestern Mutual. "In the near-term, people clearly feel a little better about the stability of the U.S. economy. At the same time, there's a drop in longer-term optimism around the attainability of the American Dream. Combined, it's a mix of improvement in the moment with uncertainty about the future."

The majority (67%) of respondents fear a financial crisis will loom soon, suggesting advisers may want to more aggressively urge clients to save, with the understanding that they cannot control market volatility or “invest their way out of the retirement problem.” Only 41% said their long-term strategy has a mix of high and low-risk investments. According to the survey, 28% of Americans feel some level of financial insecurity, while 11% said they were not secure at all.

Still, the survey did elicit some positive responses. Most Americans (72%) feel financially secure at least for the short term. Forty-three percent say the economy will be better this year than it was in 2016.

"The hope here is that Americans aren't letting their financial guard down," says Barsch. "It's easy to have a short memory when it comes to financial discipline, but long-term risk management is not something to do in starts and stops. You need to plan for what can go right as well as what can go wrong, and it has to be consistent—throughout market and economic cycles, and over the course of a lifetime."

The full report can be found at NorthwesternMutual.com.