Americans are urgently aware that they should improve their finances, but the majority aren’t doing anything to improve them. That disconnect was the major finding of the 2015 Northwestern Mutual Planning & Progress Study.
Fifty-eight percent of Americans believe their financial planning needs improvement, 21% are “not at all confident” they’ll be able to reach their financial goals, and more than one third (34%) have not taken any steps to plan for their financial future. While they said they are concerned about retirement, 43% of Americans have not spoken to anyone about retirement planning.
More than two-thirds (67%) expect financial crises comparable to the Great Recession of 2008 to occur again, but only 38% are confident their financial plans will withstand such a downturn, and nearly a quarter (23%) do not believe their plans can weather economic ups and downs.
“Intending one thing and doing another is human, but it’s an impulse we should all fight hard to resist,” says Rebekah Barsch, vice president of planning and sales at Northwestern Mutual. “How many of us know we should eat better and exercise more, but fail to take action? It’s similar with finances. We know it’s important, but we excuse ourselves, consciously or not, because it’s easy. Of course, intentions only get us so far. And when the stakes are high, it’s taking action that’s critical.”
The survey found that Americans are most concerned about the unknown and unexpected, with their greatest financial fear being “an unplanned financial emergency,” and that fear is paralyzing. Over the last four years, the number of Americans age 25 and older who say they are non-planners and have no financial goals has doubled, from 7% in 2012, to 14% in 2015.
“Some people might instinctively know they need to address their financial futures, but fear gets the best of them, and they ignore the issue, hoping it works itself out one way or another,” Barsch says. “We tell them the best remedy for fearing and ignoring is planning, preparing and protecting.”