Pre-retirees between the ages of 50 and 62 say they are very comfortable with automatic deposits to their 401(k), mortgage or permanent life insurance, a New York Life survey found.
Nearly two-thirds (64%) say that automatic saving gives them more confidence heading into retirement than other forms of savings. However, nearly half, 46% say it is difficult for them to save anything above what is being automatically routed to their 401(k) due to the financial demands they are facing. Forty-five percent wish more automatic savings vehicles were offered.
On average, pre-retirees began saving for retirement at age 34, but they wish they had started eight years earlier, at age 26. Twenty-five percent wish they had started saving 10 years earlier.
“This is a wake-up call to younger generations: Gen X, Gen Y and even Gen Z,” says Chris Blunt, president of New York Life’s investments group. Pre-retirees sit in an important vantage point. They are in a position to share what has worked well for them as they inch toward retirement. These 50- and early 60-year-olds wish they had started a serious savings plan in their 20s. Finding ways to put savings on auto-pilot is key to that plan. There is still time for earlier generations to react to these two pieces of advice.”NEXT: Men’s versus women’s feelings about automatic savings
The survey also found that 58% of pre-retirees with children living at home say it is hard to save anything above and beyond their automatic savings vehicles. And pre-retirees with children living at home wish there were more automatic savings vehicles available, with 58% of this group expressing this wish compared to 45% of all pre-retirees.
Men are more confident in their automatic savings, with 68%
of men expressing this assurance, compared to 59% of women. There are also very
high levels of confidence in various automatic savings vehicles: ninety-three
percent are confident in their 401(k) direct deposit. Eighty-one percent are
confident in the direct deposit to their college savings plan. Seventy-nine
percent are confident in the direct deposit to their mortgage, and 78% are
confident in the direct deposit to their permanent life insurance policy.
“These savings vehicles often fly under the radar, but are kind of a big deal,” Blunt says. “The ease and recurring nature of these savings vehicles make them highly effective tools for helping clients to achieve their financial goals.”
Ipsos Public Affairs conducted the survey for New York Life in late July among 906 adults between the ages of 50 and 62 with a household income of at least $80,000.