Researchers found nearly six in 10 (59%) middle class workers—those making between $25,000 and $100,000 per year—consider paying monthly bills to be their top day-to-day financial concern. That’s a seven-point jump from the 52% measured in 2012 and far in advance of the 13% who reported saving for retirement as their top financial priority.
Also suggestive among the survey findings are the more than four in 10 (42%) middle income workers who reported feeling it is not possible to both save for retirement and pay the bills.
There has also been a nearly 5% yearly growth in the number of middle income workers reporting they will have to work until at least age 80 since the survey’s first iteration three years ago, growing from 25% in 2011 to 34% this year. Perhaps more striking is the fact that less than a third of workers who reported they will likely have to work beyond 80 to meet income needs felt their employers would want to keep them that long.
While many of the percentages reported in the survey can be interpreted negatively, Laurie Nordquist, an executive vice president with Wells Fargo’s institutional retirement and trust business, said in an interview with PLANSPONSOR that there is some positivity contained in the report.
Nordquist stressed findings in the study showing that, while less than a third (29%) of respondents said they’ve put together a formal written plan for retirement, 70% of those who have a written plan described themselves as “confident” in their future retirement—compared to 44% without a plan reporting the same.
“Making a formal plan can give a retiree a roadmap, and it forces a kind of discipline,” Nordquist said. “If they have a plan it’s probably a wakeup call that, if I wait to save it’s not going to get any easier. If I have a plan I’m going to have a better sense too of what I want to get out of the markets.”
Nordquist also pointed out the effectiveness of making a formal retirement plan cut across all income levels and age groups. Despite that, nearly half of the respondents (45%) said they had too few financial assets to require a plan. Another 25% said they would not know how to put a plan together.
“We look at both of those numbers and the rest of the survey data, and we really feel that everyone needs a plan, whether you’re at $25,000 or $250,000," Nordquist said. "The good news is there are so many fabulous online tools out there that can help you make one for free.”
Other areas addressed by the survey include middle class workers’ biggest fears about saving for retirement. To that end, 40% of the middle class said “a large, unexpected healthcare expense” is their greatest fear in retirement. A similar level (37%) pointed to the “loss or diminishment of Social Security” as their greatest financial fear.
The survey also identified a general hesitancy towards investing in the stock market among the middle class. Just 24% of those surveyed reported feeling confident in the stock market, while 45% said “the stock market doesn't benefit people like me.”