Nearly half (48 per cent) of U.S. employees say they expect to retire with less than US$500,000 even though they believe they’ll need $1.28 million, according to a new survey by Schroders.
It found a quarter (26 per cent) of respondents expect to retire with less than $250,000, while just 30 per cent believe they’ll reach the $1-million mark. Despite the gap, only 40 per cent said they feel confident they’re on track to meet their retirement goals.
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Seven in 10 (69 per cent) said their workplace retirement plan is their most important financial asset. A fifth (19 per cent) said they’ve decreased their contribution rate, most within the past two years and 17 per cent said they’ve borrowed from their plan. Just 20 per cent reported using automatic escalation.
Among those who made a withdrawal from their plan, a third (29 per cent) cited family or personal emergencies, followed by credit card or other debt (25 per cent) and the rising cost of living (22 per cent), purchasing a home (15 per cent) and medical expenses (14 per cent).
When asked about asset allocation, 31 per cent of respondents said they don’t know how their retirement savings are invested. Those who did cited an average portfolio made up of equities (31 per cent), cash (23 per cent), fixed income (16 per cent), other assets (16 per cent) and target-date funds (14 per cent). Among those holding cash, more than half (53 per cent) said they’re doing so for safety, followed by a desire to diversify their portfolio (47 per cent) and uncertainty about how to invest (23 per cent).
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More than six in 10 (65 per cent) said they worry too much about money, while 56 per cent said financial stress negatively affects their health and 53 per cent spend at least one hour a day thinking about financial issues.
More than half (59 per cent) of respondents said they wish they received more guidance from their employer on how to invest their workplace plan assets.