Retirement is a major worry for numerous individuals. Will I be able to retire with dignity or retire at all? Almost half of those surveyed (46%) anticipate having savings of under $500,000 upon retirement, with 23% expecting less than $250,000. Around 29% are confident they will exceed the $1 million milestone before retiring.
Deb Boyden, head of U.S. Defined Contribution at Schroders, pointed out that there is a significant disparity between the amount of money plan participants believe they need to live comfortably and the amount they anticipate having saved for retirement. Many savers aim for a retirement savings target exceeding $1 million, yet they are not following the appropriate saving and investing strategies to achieve this objective.
As a result, over a quarter of participants (28%) admit to being unaware of how their retirement funds are distributed. For those who are aware, the distribution of assets in various retirement investments, such as workplace plans, IRAs, or other accounts, indicates they are making investment decisions based on emotions, according to the company.
Based on the research, American workers who are currently enrolled in a workplace retirement plan have the following distribution of retirement investments:
Stocks (29%)
Cash (28%)
Bonds (19%)
Target date funds (16%)
Other investments (8%)
Interestingly, the primary reason cited for holding cash in their retirement portfolios was “fear”—with 66% of participants expressing concerns about potential stock market losses, and 24% admitting uncertainty about how to best utilize their cash reserves.
Boyden stressed that fear can hinder us in various areas of life, including retirement planning. He pointed out that for individuals with long-term savings goals, holding onto large amounts of cash means missing out on the benefits of compound growth.
Moreover, 70% of respondents consider their workplace plan as their most crucial retirement asset. About 59% express a desire for more guidance from their employer on investing plan assets, while less than half (42%) are currently consulting a financial advisor.
To overcome the fear of market losses and leverage the power of compounding, consider using Life Insurance as a safeguard against losses and for potential tax-exempt or tax-free withdrawals. Connect with an experienced professional today to explore how this approach could help secure your retirement bit/ly/ChatWithFreddie
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