New York Life Wealth Watch survey: Professional guidance plays crucial role in financial preparation for life events.

New York Life  |  September 17, 2024

NEW YORK - New York Life’s latest Wealth Watch survey finds that American adults overwhelmingly report they are not financially preparing for major life events like purchasing a home, starting a family, changing careers, or retirement. Half of adults who are currently preparing for a major life event say their biggest challenge is not having enough money.

Only 40% of pre-retirees—those between five and 10 years away from their desired retirement age—say they are financially preparing for retirement. Additionally, half of pre-retirees think they will retire later than expected, and 22% think they may never be able to retire. Generation X pre-retirees report doubts as they approach their retirement years, with only a quarter believing they will retire on time.

“No two journeys through life are the same. But one thing is certain: we all experience major life events, both planned and unplanned, and those events come with financial impacts,” said Jessica Ruggles, corporate vice president of Financial Wellness at New York Life. “Preparedness is key. Our data shows that working with a financial professional helps people feel more prepared and can lead to better financial outcomes: 53% of people who work with a financial professional felt financially prepared for their major life events, versus 33% of those who don’t. Thirty-one percent of people who work with financial professionals report facing no challenges when preparing for their life events, versus only 17% of people who don’t. Navigating competing priorities and tradeoffs, along with increased longevity, creates a dynamic environment. However, financial emergencies are frequent, leaving many Americans vulnerable to life’s unexpected events.”

Life events like marriage, launching a business, or becoming a caregiver for an aging loved one are significant moments to assess finances. However, the majority of Americans say they are not actively planning for these critical milestones

American adults who experienced the following life events report on average feeling very prepared for purchasing a home (45%), getting married (43%), growing their family (35%), and starting a business (34%); and least likely to feel very prepared for divorcing or separating (18%), losing a loved one (15%), falling ill and requiring medical care (14%), and being impacted by layoffs (12%). Retirement falls into the middle, at 30%.

• Sixty-two percent of adults thought they were financially prepared to navigate their life milestones, but were not.
• Seventy-six percent of adults were surprised by some aspect of their life event. Compared to their expectations, 41% found it cost more, 29% found it more impactful on their health/wellbeing, and 27% found it more financially complex.

Financial preparedness and sources of support by generation:

• Younger generations are more likely to say they recognized that they needed financial help and sought it out while experiencing life events (Gen Zers: 31%, millennials: 32%, Gen Xers: 20%, baby boomers: 17%).
• Millennials are the most likely to say that they felt very prepared to financially handle their life events, while Gen Xers felt the least prepared (Gen Z: 27%, millennials: 34%, Gen X: 20%, baby boomers: 27%).
• The top sources where adults report getting help to manage their finances while navigating a life event are friends and family (62%), financial professionals (32%), and internet searches (26%).
• After friends and family, which all generations reported as their top source for support, Gen Zers were most likely to use social media for guidance (32%), millennials (39%) and Gen Xers (24%) preferred internet searches, and baby boomers (49%) were most likely to turn to financial professionals.
• According to the New York Life Foundation’s 2024 State of Grief Report, 63% of respondents report having time off specifically for bereavement, but less than half (47%) report that this time off was paid. This highlights an opportunity for employers to bolster their resources for bereavement support.

“We tend to overestimate our chances of positive experiences and underestimate our chances of negative ones, leading to a disconnect between our financial expectations and realities. While we plan for things to go the expected way, unexpected events are common. For example, falling ill may happen suddenly, but someone age 65 or older has an almost 70% chance of needing long-term care, according to 2020 figures from the Administration for Community Living,” said Ruggles. “The typical retirement preparation often happens too late and is individualistic in approach, meaning planning and decision-making are thrust upon the individual, rather than an employer or financial professional providing support early and often. This points to the importance of having a relationship with a financial professional who can help set realistic expectations as well as create long-term financial strategies that include sufficient emergency savings, investments designed for longer durations, income protection solutions, and opportunities to fund things we enjoy doing. The importance of personalized, professional guidance becomes even clearer as we see more people turning to social media and online searches, which broadens access to financial education, but also leaves people at risk of receiving inaccurate advice.”

Americans nearing retirement report concerns they will have to delay retirement, and want more information to help them prepare

• Adults approaching retirement who work with a financial professional are more likely to say that they know how much money they need to save to be comfortable in retirement compared to those who do not (76% vs. 55%).
• Thirty-seven percent of pre-retirees have retirement savings and only 22% have a retirement strategy.
• Sixty-three percent of pre-retirees don't think their 401(k) and Social Security will be enough to support them in retirement.
• Eighty-two percent of pre-retirees say they are facing challenges preparing for retirement such as saving enough money (56%), managing debt (31%), and rising healthcare costs (29%).
• While 61% of retirees saved more or about the same as they thought they would before retiring (more: 13%, about the same: 48%), 39% of retirees saved less than they thought they would.
• Retirees are less likely to say that they have financial security during retirement compared to pre-retirees’ expectations (24% vs. 30%).
• Seventy-one percent of adults are looking for further guidance or advice to feel prepared for retirement—with Social Security (38%), preparing for healthcare costs (30%), and product knowledge (e.g., annuities, long-term care insurance) (24%) being the top areas of focus.

Rising longevity and declining financial confidence of Gen Xers result in plans to retire later or not at all. However, across all income levels, 18% of the Gen X cohort report having successfully retired

• Seventy percent of Gen X pre-retirees think they will retire later than expected or not at all. Only a quarter of Gen X pre-retirees believe they will retire on time.
• Despite approaching retirement age, only 46% of Gen Xers are actively planning for retirement. Among those actively preparing, growing their retirement savings accounts (48%), reducing debt (47%), and contributing to their investment accounts (37%) are their top financial priorities.
• Seventy-three percent of Gen Xers who work with a financial professional are confident that they will save enough to live comfortably in retirement, compared to 45% who don’t.
• Gen X pre-retirees working with a financial professional are more likely to say that they know how much money they need to save to be comfortable in retirement, compared to those who don’t (71% vs. 50%).

“The potential for people to live longer has implications for the workplace, retirement, and health planning. Gen Xers, the oldest of whom are now eligible to take retirement withdrawals, are in a more financially precarious position compared to other segments, likely due to sacrifices to their own financial security to provide care, which strains all areas of wellbeing. Our data shows that there are pathways for building retirement confidence. Among adults in this generation who are retired, two-thirds reported saving the amount that they wanted or more before retiring because they had a financial strategy. Access to human advice and personalized guidance remains paramount in helping individuals prepare for a more secure retirement without fear of outliving their assets,” said Ruggles.

ABOUT WEALTH WATCH                                                 

Wealth Watch is a recurring survey from New York Life that tracks Americans’ financial goals, progress toward those goals, and feelings about their ability to secure their financial futures, identifying key themes and trends that are emerging about topics like retirement planning, the role of protection-oriented solutions and the importance of financial guidance.

SURVEY METHODOLOGY

This survey was fielded between August 9 – 11, 2024 among a sample of 2,230 adults, with a 1,001 Gen X oversample which includes only those who were born between 1965-1980. The interviews were conducted online and the data were weighted to approximate a target sample of adults based on gender, age, race, educational attainment, and region. Results from the full survey have a margin of error of plus or minus 2-3 percentage points.

ABOUT NEW YORK LIFE

New York Life Insurance Company (www.newyorklife.com), a Fortune 100 company founded in 1845, is the largest mutual life insurance company in the United States¹ and one of the largest life insurers in the world. Headquartered in New York City, New York Life’s family of companies offers life insurance, disability income insurance, retirement income, investments, and long-term care insurance. New York Life has the highest financial strength ratings currently awarded to any U.S. life insurer from all four of the major credit rating agencies.²

1 Based on revenue as reported by "Fortune 500 ranked within Industries, Insurance: Life, Health (Mutual)," Fortune magazine, 6/4/24. For methodology, see https://fortune.com/franchise-list-page/fortune-500-methodology-2024/ 

2 Individual independent rating agency commentary as of 11/17/2023: A.M. Best (A++), Fitch (AAA), Moody’s Investors Service (Aaa), Standard & Poor’s (AA+).

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