Financial Planning
By Stacy SchultzÂ
April 7, 2008
A quarter of Americans have not yet started planning for retirement, according to a new survey released by Bank of America.
The study of 1,000 interviews surveyed 750 nationally representative Americans and 250 affluent Americans (with $100,000 to $3 million in investable assets). Both groups identified two key areas of confusion about retirement planning: determining types of investments to make and knowing how much they will need to retire. However, non-affluent Americans also cited when to retire and how to start planning as difficulties.
Nearly 80% of non-affluent Americans say they are familiar with a 401(k) plan. Nevertheless, among those with access to a 401(k), 22% do not participate. Nearly 70% are familiar with traditional IRAs, but only 40% have one. Further, more than half of non-affluent Americans have no idea what a ROTH IRA is. While affluent Americans are more likely to be familiar with IRAs, only 56% incorporate them in their retirement planning. They are also no more likely to fund their IRA annually than non-affluent Americans—43% of each group contributes every year.
The survey shows that most affluent Americans are addressing their economic concerns by adjusting their expenditures over the short-term while leaving their long-term investments untouched. In fact, 57% are reducing their spending based on market conditions, cutting down such categories as travel, vacations and shopping. In addition, 73% say they haven’t changed the allocation of their retirement investments.