Numerous Factors Drag Down Americans' Retirement Goals

As Americans face a retirement income shortfall, it’s critical to understand how savings translate to income.

Even those Americans closest to retirement age still are not saving enough to meet their retirement income goals, according to the latest BlackRock Global Investor Pulse survey. 

Overall, 60% of Americans are actually saving for retirement: 65% of men, but just 55% of women. Saving to live comfortably in retirement is their most important financial priority, Americans say, after saving money in general—yet most (71%) are concerned they won’t be able to reach that goal.

The reality is that Americans of all ages face a considerable shortfall in terms of the income they want in retirement compared with the income their savings can actually generate. Baby Boomers (age 55 to 65), for example, say they want $45,500 in annual income in retirement—but they have accumulated an average savings of $136,000, an amount that would generate just $9,129 in annual income, leaving them short by $36,371 per year.

Daily living expenses weigh on Americans, BlackRock says. Americans have complicated feelings about their prospects for retirement—confident in their investment decisions, yet worried about the prospect of living comfortably. While many need to increase their savings to meet their retirement goals, they often feel pressure from bills and monthly costs. The biggest factor in influencing retirement savings is overall assets, BlackRock says, with 68% of Americans finding it hard to pay bills and save for retirement at the same time.

NEXT: More years in retirement and too much cash

Another challenge is increased lifespans. And longevity means longer retirements, which means many investors are worried about having enough for all those years. Others still are overconfident—feeling they are making the right investment decisions, even though their current investments will not yield the income they expect. One of the most common obstacles: holding too much cash. A peek into investor portfolios shows that more than half of respondents (57%) believe their holdings are diversified, even though they hold 65% of their wealth in cash.

Savers are still in the process of evolving to investors, BlackRock says, and although Americans can be quick to embrace new financial methods and technologies, their underlying strategies and money attitudes don’t always follow as quickly. Online banking is widely adopted, and most people use the Internet to help with financial decisions, but when it comes to investing, Americans have difficulty adjusting to today’s realities of longer lives and lower yields.

The BlackRock Global Investor Pulse survey interviewed 31,139 respondents, in 20 nations, including Canada and the U.S., which included 4,213 respondents. No income or asset qualifications were used in selecting the survey’s participants, making it a truly representative sampling of each nation’s entire population. The survey was fielded from July to August by the Cicero Group, an independent research company.

The BlackRock Global Investor Pulse survey can be accessed through BlackRock’s website.