Advice on physical fitness isn’t hard to come by these days, and that’s certainly for the best. Health advice is widely circulated and taken to heart, so much so that one could even call it fashionable. However, this is not the case when it comes to Americans managing their personal finances.
In a recent survey conducted by Bank of America and Merrill Lynch, some surprising feelings about the average financial wellness of the American worker came to light. The survey’s results show that employees are looking for quality financial advice but are having a difficult time finding it, or even knowing where to look. This could have far-reaching implications as many in the U.S. and around the world still search for ways to live sustainably as economic uncertainty seems to be one of the few constants in recent years.
According to the survey, which polled more than 1,200 employees in the U.S. currently enrolled in a 401(k) plan, 60 percent have anxiety about their current financial situation. Just five out of 10 respondents reported similar feelings in the 2014 survey. Meanwhile, a whopping 83 percent said their workplace benefits, like a 401(k), are critical components of their financial security.
Lorna Sabbia, head of retirement and personal wealth solutions at Bank of America Merrill Lynch, found these statistics troubling. In a conversation with BenefitNews.com, Sabbia said this should serve as a wake up call for employees, as well as financial professionals looking to make a difference with their services.
Missing the mark
One of the biggest issues evident in the survey results is the chronic underestimation of just how much it will take to live a comfortable life in retirement. On one hand, around 66 percent said they are focusing more on planning and saving for life after work, and 70 percent said they have a clear understanding of how much they will need. However, when asked for their target savings goal, 40 percent said it was less than $500,000, and 61 percent said they needed less than $1 million.
In reality, according to Bank of America, the average retiree will spend around $400,000 on health care alone. Even a $1 million savings fund would only allow for an annual income of $40,000 over the life of a typical retiree.
Clearly, although many think otherwise, there is still a huge need for education and guidance regarding retirement investment and planning. Luckily, a majority of survey respondents admitted they could use financial advice, even if they did think their savings were already on track. Only 36 percent of those polled in the study said their employer offered some sort of financial wellness program. Although this is a growing trend, it is not nearly as widespread as would be necessary.
With this in mind, the advantages of a dependable financial professional to lean on for support on these issues becomes obvious. When employees partner with an advisor they trust, it becomes remarkably easy to get on track with every goal pertaining to financial wellness, from short-term budgeting to long-term care and retirement planning. It may not be as trendy as hiring a personal trainer, but it’s a decision that could end up paying for itself.