This is a new high and a 10 percentage point jump from 2012, according to the study, “Engaging Investors: Reasons for Seeking Help and Taking Action,” by Hearts & Wallets. In 2014, nearly two-thirds (64%) of the 90 million U.S. households with investors ages 21 to 64 who do not plan to retire within five years, referred to as “Accumulators,” said they have difficulty with retirement planning. This is up from 54% in 2012 and 50% in 2010.
The most difficult tasks for Accumulators include identifying they year they might stop working (61%); estimating the required minimum withdrawals from retirement accounts (57%); deciding where to put savings (54%); and getting started with saving and investing (51%).
In contrast, for pre- and post-retiree households in or within five years of retirement, there is less difficulty with these tasks, according to the study. Their most difficult tasks in 2014, similar to 2013 levels, are estimating or budgeting spending in retirement (33%); determining appropriate levels and types of health insurance (31%); and determining the amount of income that can safely/sustainably be withdrawn from personal assets (28%).
High-net-worth investors also grapple with retirement planning, the survey found. For investors with $500,000 to $2 million in investible assets, 45% have difficulty with retirement planning. For investors with more than $2 million, 27% find this task difficult.
Nationally, the biggest advice gaps are in knowing how to find the right resources for retirement planning (40%), handling market volatility (38%), choosing appropriate investments (37%), and determining appropriate insurance levels (36%). The study identifies key factors driving difficulty with retirement planning, with a big correlation between increasing confusion over investment information overload and more difficulty with retirement planning, as well as increasing fear of being ripped off by financial professionals, less enjoyment and confidence with money.
“There’s a real need for professional advice, even among more sophisticated investors,” says Chris Brown, Hearts & Wallets principal and co-founder. “More than 50% of all U.S. households currently aren’t getting the help to be prepared for whatever the future brings.”
The study analyzes attitudes and behaviors of investor life stages from age 21 to the later retirement years and is drawn from the Hearts & Wallets Quant Panel Database. The Quant Panel serves as the engine for Hearts & Wallets annual reports as well as emerging trend analysis and consists annually of more than two million data points from 85 families of savings and investment questions asked during 40-minute interviews of 5,500 U.S. households.
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