Most Americans Value Retirement Planning, Fewer Than Half Appear to Do It

A new AARP study finds a wide gap between how people feel about retirement planning and how prepared they say they are for life after work.

A new study by national retirement advocate AARP found that on average 42% Americans do not feel prepared for retirement, even though an average of 87% believe retirement planning is important.

The results of the research reveal a wide gap between what Americans might want to be doing around retirement planning versus how prepared they actually feel to afford their retirement, according to research from the Washington D.C.-based nonprofit.

AARP said the gap between the importance people say they place on retirement planning and how prepared they feel is at least 30 percentage points for every age group. The biggest gaps showed up in the middle range of those surveyed, with people aged 60 to 69 leading with a 51% gap, followed by people aged 40 to 49 with a 49% gap. The smallest gap was for those furthest from retirement, at 32% for people aged 20 to 29.

“Although people recognize the importance of planning for retirement, for many the idea of retirement is overwhelming and/or terrifying,” the AARP report said. “These feelings may lead them to avoid planning altogether or to give up easily when they don’t know where to start, don’t know whether they’re on the right track, and/or don’t know how to stay the course.”

Source: AARP

The research highlights the disconnect between what people say about retirement planning and how much they actually save and plan. Recent research provided to PLANADVISER by consultancy Hearts & Wallets found that more than half (53%) of Americans who rely on their workplace retirement plan as their primary financial resource do not sign up for more than the most basic self-service assistance. That’s despite other surveying showing that Americans feel stressed about their finances.

The AARP also found that, in addition to not feeling prepared to manage their own post-work life, many retired people have neglected to plan for their emotional and health needs.

The majority of those in retirement (57%) said they gave emotional health the least amount of planning before retiring, which was followed by a lack of planning for fulfillment in life (46%). One-third (33%) of retired adults said they did not plan for their physical selves in retirement.

These retirement plan gaps provide an opportunity for individuals, employers, financial institutions and educational organizations to help people prepare better for a successful retirement, the AARP said.

While younger generations understand the importance of saving, most are still primarily focused on earning income to pay off debt and save for immediate needs and wants, according to the AARP findings. They also express a lack of information and resources when it comes to doing the “right thing” for retirement planning.

“All these feelings contribute to the belief that they will never be in a financial position to retire comfortably, and thus they continue to question not only its viability, but also its personal relevance,” the AARP report said.

Employers can help with programs including “easy and convenient” retirement saving plans, a flexible transition into retirement through part-time work and being a trustworthy source of information and advice, the report said. Financial institutions, for their part, are encouraged to engage consumers who do not see themselves reflected in educational and marketing materials, with diversity and inclusion being both a driver for working with savers, as well as growing a company’s market share, the AARP report said.

The AARP report was based on research conducted from August 2020 to May 2021 that combined AI-assisted ethnographic analysis, qualitative interviews and an online quantitative survey of more than 3,000 people. The study was funded by Collaborata and led by RTi Research with The Business of Aging, and Aha!