via Lexington Law
Survey: One in Four Seniors Wish They Had Taken This Basic Financial Advice Sooner
The philosophy “live life with no regrets” can help people embrace the present instead of ruminating about the past or worrying about the future. However, there’s a caveat that you should be able to healthily move forward and learn from any mistakes. Based on our recent survey results, seniors may be naively optimistic about their finances. Over half of respondents say they have no financial regrets.
According to the Federal Reserve, however, the median retirement savings of those aged 55 to 64 is $120,000 and is slightly higher among those aged 65 to 74 at $126,000. Without context, that may seem like a fair amount, but many experts recommend having at least seven times your annual salary saved by the age of 55. Considering that the average salary is around $50,000, that would mean retirement savings of those 55 and older should be equal to or higher than $350,000!
Here are a few more takeaways we found among those who did have financial regrets:
- Approximately 1 in 4 seniors regret not saving and investing sooner
- 10% of seniors say taking on too much credit card debt is their biggest financial regret
- Women are nearly 2x as likely as men to regret taking on too much credit card debt
One-Third of Seniors Wish They Had Saved More and Spent Less
The idiom “hindsight is 20/20” says it all. The remaining 44 percent who did have financial regrets mostly felt that they had spent too much and saved too little. To break it down further, 24 percent of those aged 55 and above said that not saving and investing sooner is their biggest financial regret. It’s the advice every financial expert gives, but few people take.
However, it’s important to take into account how much the personal finance landscape has changed in the last 70 or so years. For one, turbulent financial times like the Great Recession cost a quarter of Americans their retirement savings just to make ends meet. Also, retirement itself has changed significantly with the rise of the 401(k) over traditional pension plans.
Many of today’s seniors grew up with the idea that you enrolled in a company’s pension plan, didn’t have to make contributions and then received a lifetime payout that would supplement Social Security benefits. But with many companies opting for partial, or in some cases, full freezes on pension plans, many workers nearing retirement were not given the opportunity to adequately prepare themselves. Three in five Americans over the age of 55 don’t know how much they should be contributing to retirement savings.
The other most common regret among today’s seniors is taking on too much credit card debt. Baby Boomers are among the top two generations with the highest average credit card debt at $7,550—just behind Generation X at $7,750. Much like retirement, credit has changed drastically over their lifetime. While the concept of credit isn’t inherently new, credit cards with revolving credit as they’re used today didn’t really take off until the late 1970s. As such, education around responsible credit card usage was lacking for the Baby Boomer generation. This timing could also be indicative of why the 55 to 64 age group is 57 percent more likely to regret credit card debt than those 65 and older. When credit cards grew in popularity they were in their early 20s and likely more susceptible to the enticing promise of the financial opportunity offered by credit cards.
Men and women share common regrets across the board, except when it comes to credit card debt. Women are 1.7 times as likely as men to say their biggest financial regret is taking on too much credit card debt. Today, the median annual income for women is 80 percent of the median annual income for men — and that’s after all of the advancements toward gender equality that have been made in the past several decades. For women over the age of 55, that gap has been much more apparent. In the 1960s and 1970s, women only made about 60 percent of the annual income that men made. This has slowly and steadily increased over the last four decades to get to the 80 percent we are at today. Ultimately, this means women had to (and still have to) work that much harder to get out of debt.
With the two biggest regrets being saving too little and accruing too much debt, it’s only natural that the majority of people find themselves wondering at some point in their lives, “Should I pay down debt or save for retirement?” Unfortunately, the answer is it depends on a variety of factors like your debt, lifestyle and age. It can be overwhelming to think about planning for retirement, but taking small steps and starting today are the best things you can do. No matter how old you are, there’s always a way to catch up on retirement contributions.
Methodology: This study consists of one survey question conducted using Google Surveys. The sample consists of no less than 1,000 completed responses. Post-stratification weighting has been applied to ensure an accurate and reliable representation of the total population. The survey ran in January 2019.