Investors Working on Overall Financial Wellness

The majority of investors already follow a number of basic steps that contribute to overall financial health, according to the Wells Fargo/Gallup Investor and Retirement Optimism Index.

However, two practices prove more challenging for investors: contributing to an emergency fund and saving at least 10% for retirement. While 67% of non-retired investors say they already save at least 10% of their income for retirement and another 14% say they don’t, but it would be easy, 19% don’t save this much, and say doing so would not be easy.

The importance of 401(k)-type plans as a vehicle for helping to achieve retirement security is clear in the finding that 69% of investors, including 76% of non-retirees and 50% of retirees, have a 401(k) or 403(b) plan.

The majority of investors (58%) say they get professional advice when making investment decisions for their 401(k)-type plan. While there is no significant difference by asset level, women are more likely than men to say they use professional advice: 66% vs. 51%.

At the same time, 40% of investors say they make their own decisions about what to include in their 401(k)-type plan. Most of these say they like it that way, but one-quarter of those who make their own decisions would prefer to have professional advice.

“From the first day on the job all the way through the retirement years, there are a number of key decisions and levers that can impact your retirement outcome,” says Jon Graff, director of Participant Services at Wells Fargo Institutional Retirement and Trust. “Although some investors prefer to do it alone, almost seven in 10 (those who already get professional advice plus those who don’t but would like to) would rather get some help for these key decisions. There are many ways to get that advice, depending on where you are in your journey.”

Overall, 57% of investors say they contribute to an emergency fund to cover three to six months of expenses and another 23% are not contributing but say it would be easy for them to start. However, 19% do not have such a fund and say starting would not be easy.

Survey respondents say they are taking steps that contribute to overall financial health:

• 92% pay all of their bills on time every month;
• 77% are making progress paying down high-interest debt;
• 68% review their insurance needs once a year;
• 61% check their credit score once a year; and
• 52% track all of their spending by category.

For investors currently in the workforce:

• 71% of non-retirees make contributions to savings through automatic payroll deductions; and
• 67% of non-retirees save at least 10% of their income for retirement.

The survey finds nearly half (47%) of investors have children and at least one living parent, placing them in what is commonly called the “sandwich generation.” Thirty-two percent of investors report providing financial help to either a child age 18 or older, a parent, or both. Thirty-five percent of non-retired investors and 25% of retired investors give such financial support to these close family members.

More than half of investors who aid an adult family member financially believe it is hindering their ability to save for their own retirement. This works out to be 20% of all investors and 22% of non-retired investors.

Specifically, among all investors, more than half (57%) report they have one or more children aged 18 and older and, of these, 46% provide financial support to at least one of them. About two-thirds of investors (62%) have at least one living parent and, of these, 14% say they provide either or both parents with some degree of financial help.

Many investors are engaging in important conversations with family members about money. Specifically, 70% of investors who have a child younger than 18 say they have spoken to them about the importance of saving, and 65% of investors who have at least one living parent say they have discussed their parents’ financial security with them.

The survey was conducted by telephone with 1,007 U.S. investors February 10 through 19.