Americans Have Trouble Prioritizing Retirement

According to Capital One ShareBuilder’s Financial Freedom Survey, 93% of working Americans know they should be contributing to their retirement, but only 72% are doing so. Despite Americans estimating they should be contributing 12.1% of their income on average, only an estimated 6.4% is currently being saved. Half believe they should be saving more than 10% of their income for retirement, but only one-fifth are currently saving 10% or higher. Nearly one-quarter of employed adults (24%) are not actively saving.

The survey found that financial stress is keeping three out of four non-retired Americans (75%) up at night. The leading cause of sleepless nights for most non-retirees (34%) is supporting children and saving for college, while retirement is a top concern for only 13%.

“Unfortunately, saving for retirement is often put on the back-burner for what seem like more pressing financial priorities, such as paying for college,” says Dan Greenshields, president of Capital One ShareBuilder, Inc. He notes that now more than ever, Americans are responsible for ensuring their own financial security during retirement, and “the earlier they begin to plan and save, the better.”

The survey also found:

• Fifty-eight percent of Americans plan to retire by age 65, yet nearly the same percentage fear they’ll never save enough.
• Among non-retirees, women (61%) are significantly more concerned than men (52%) that they may never save enough for retirement.
• One quarter of non-retired men report they are not at all concerned with the prospect of not having enough to retire, and employed men tend to save a higher percentage of their income for retirement than women (an estimated 7.2% vs. 5.6%, respectively).
• Non-retired Americans ages 45 to 64 are more likely to be concerned they’ll never save enough for retirement (at 63%), while younger generations (ages 18 to 34) are less likely (at 52%).
• Employed Americans ages 35 to 64 are significantly more inclined to believe they should be saving more than 10% of their income for retirement compared to younger adults ages 18 to 34 (57% vs. 41%, respectively).

Among employed adults, the average percentage of income saved for retirement increases with household income, ranging from an estimated 3.7% (less than $35K) to 10.4% ($100K or more). When asked how much the average 45-year-old person needs to save to retire at age 65 and have an after-tax income of $50,000 a year, slightly more than half of non-retirees said less than $1 million is needed.

“When determining how much to save for retirement, there are a number of questions to ask and options to consider,” said Greenshields. “Retirement looks very different for different people.”

The survey found men are significantly more likely than women to trust themselves the most for financial advice (36% vs. 25%, respectively), while women are more inclined to trust their financial adviser or broker (33%, vs. 23% of men). Differences also emerge among age groups, with investor under 34 years of age being most trusting of family members (43%), and those 65 and older most trusting of themselves (53%).

Financial advisers or brokers are more likely to be a trusted source of advice among investor age 35 to 64 (34%) as opposed to those in the 18 to 34 category (21%). Only 12% of respondents age 65 or older trust advisers over other sources.

The survey was sponsored by Capital One ShareBuilder and conducted via ORC’s CARAVAN Telephone Omnibus Survey. ORC completed 1,008 landline and cell phone interviews with U.S. resident adults age 18 and older February 13-16, 2014.