A study from Fidelity Investments, “New Year Financial Resolutions Study,” finds the number of respondents choosing short-term financial goals as a priority rose to 39% this year, compared with 29% in 2012. The number choosing long-term financial goals decreased to 53%, compared with 65% in 2012.
For the third consecutive year, among those considering a financial resolution for 2014, the top three New Year’s financial resolutions continue to be saving more (54%), paying off debt (24%) and spending less (19%).
However, the focus on short-term goals does not indicate that people are ignoring long-term goals such as retirement, says Ken Hevert, vice president of retirement products, Fidelity Investments. Rather, they are prioritizing their financial goals differently.
“Saving for retirement is still the No. 1 long-term financial goal. The shift to short-term goals by employees is to address short-term financial issues now, such as paying down debt, and prevent the need to take money away from their retirement nest egg in the future,” Hevert told PLANSPONSOR.
People want to save more, which Hevert attributes to two factors—economics and behavior. “From an economic standpoint, more people said they were in a better personal financial situation than they were a year ago—26% versus 19% last year. From a behavior standpoint, more people are setting financial resolutions, feeling the need to have goals and be more self-reliant,” he says.
In terms of what plan sponsors can do to help their participants formulate and achieve their financial resolutions for the future, Hevert recommends that they:
- Help participants calculate the benefits of saving;
- Recognize or reward the achievement of savings goals; and
- Break down long-term goals, such as saving for retirement, into smaller pieces.
Hevert also recommends plan sponsors help participants of different ages understand where they are on their “roadmap” of saving, as well as what they need to focus on now and what can be addressed later.
The study finds that 29% of respondents admit they have made financial resolutions in the past but were unable to stick with them. In addition, making resolutions may be more of an individual exercise. Of those queried for the study, 44% said they tend to make financial resolutions by themselves, with only 29% making them with a significant other.
The study presents the findings of a telephone survey conducted among 2,027 adults, ages 18 and older. The phone surveying was done by ORC International, on behalf of Fidelity, between November 7 and 11.
An executive summary of the study can be downloaded here.