In State Farm’s “Financial Plan B” survey, 81% of respondents agreed that having an alternative financial plan is very important, but only 45% claim to have planned for a future crisis. Additionally, many Americans have not prepared for short-term financial difficulties, and even more expressed doubts about their retirement plans.
Key findings of the survey include:
- 35% of Americans say they have funds on hand to meet financial needs for up to three months, and 15% do not have funds to meet commitments beyond a single month;
- 54% reported would accept a lower-paying job than the one they currently hold if they were out of work for six months or fewer;
- 61% admitted they would take money from a 401(k) or other employer-sponsored retirement savings vehicle as part of their Plan B, 34% would downsize their home and 22% would move in with family;
- Almost 25% of future retirees think they will be able to retire at age 60, but the same number doubt they will ever be able to retire; and
- More than 60% of Americans say they will not be able to retire without Social Security and/or Medicare as they exist today.
“With the economic downturn and concerns about continued slow growth, it’s critically important that people take a clear-eyed look at their financial situation and develop realistic options they can have in place should unexpected financial difficulties pop up,” said Joe Monk, senior vice president and chief administrative officer, State Farm Life Insurance Company.
Given these uncertainties, State Farm recommends the following tips to help prepare against the damaging effects unexpected life events can have on savings and retirement plans:
- Start the conversation with loved ones
- Work with someone you trust
- Put your plan in writing
Harris Interactive conducted the telephone survey for State Farm between May 6 and May 16, 2011. A nationally representative sample of 2,017 U.S. adults aged 18 and older were asked to consider their financial readiness in the face of a major life crisis such as loss of a job, a divorce, the unexpected death of a spouse or partner, or a catastrophic illness that leaves someone unable to earn an income.