The pandemic and ensuing lockdowns have caused Americans to reflect on their priorities, with some reporting an increased focus on their financial situation and future security, according to the Schroders Retirement survey.
Their top focus, unsurprising during a public health crisis, is their own health and fitness, followed by spending more time with family. However, their remaining priorities indicate a greater focus on the future and financial security. The survey found 39% of respondents have increased their focus on saving for the future—just above deciding on what to watch on Netflix or other streaming services (38%). Other priorities include developing a financial plan (29%) and their investment portfolio (26%).
It seems some investors will need some help with their investments, as the Schroders retirement survey found almost half of respondents don’t know how their assets are invested, and those who do may have inappropriate allocations. For example, workers between the ages of 45 and 59 have about 30% of their assets in equities and 27% in cash. Workers 60 and older have 35% of their assets invested in equities, and are holding 25% in cash.
“The good news is people are focused on saving for the future even during COVID. But the question remains, ‘Will they have enough for retirement?’ The way to improve retirement readiness is through better knowledge, guidance and investment choices,” Joel Schiffman, Head of Intermediary Distribution, North America at Schroders, said in a statement. “Not knowing how your assets are allocated, or holding one-quarter or more of your retirement savings in cash, indicate there may be a need for a greater understanding of how a diversified portfolio could maximize growth while managing risk.”
Although more than a third of respondents said saving for the future has been a bigger focus since the pandemic started, almost as many said they’ve had to save less. When it comes to saving specifically for retirement, the numbers get worse. Only 27% of respondents—including 26% of near-retirees—said they’ve done a very good job of saving and are on track to retire when they want to.
Part of the reason may be that most workers plan to continue working during retirement, and not entirely for financial reasons. Fifty-seven percent say they will continue working to stay busy, and 56% say they like it. Fifty-three percent acknowledged they’ll continue working in retirement in order to cover basic living expenses.
The survey uncovered an interesting obstacle to planning for retirement. Seventy percent of respondents said they aren’t planning for retirement because they don’t have enough saved yet.
“It’s a Catch-22 situation. Investors need a plan to generate enough assets for retirement, but they don’t think they have enough assets to justify a plan,” Schiffman said. “Planning doesn’t require a lot of assets; it starts with setting a goal and saving toward it by taking advantage of an employer’s defined contribution plan or opening an investment account or IRA.”