What a difference 15 years makes. New research has found that the financial health and attitudes of consumers has eroded significantly among a majority of financial decision makers since 1997. Most notably, just 30 percent of Americans said they felt comfortable financially in the recent survey, compared with 38 percent in 1997.
That, however, was not the only area where changes were seen. Nearly 40 percent of Americans said they lived paycheck to paycheck compared with 31 percent in 1997. The most noticeable difference came in regard to retirement. More than half of the respondents said they had fallen behind in their savings for retirement compared with 38 percent of people who said so in 1997. Additionally, just 34 percent of people felt they would be able to retire by age 65 versus 50 percent in 1997.
Despite the financial challenges of recent years, the research found that financial planning can help to improve retirement outlooks significantly. Across all income brackets, people who planned financially felt more comfortable about their financial futures and more confident about meeting their financial goals. Planners also felt more confident about managing money, savings and investments.
"Our survey clearly shows that having a personal financial plan helps both rich and poor achieve their financial goals," said Stephen Brobeck, Consumer Federation of America (CFA) executive director, which sponsored the research. "Having a financial plan increases one's confidence and effectiveness in managing, borrowing and saving money."
Even with those benefits, just 31 percent of people said they have a comprehensive financial plan in place. An additional 65 percent said they follow plans for at least one savings goal. Lacking trust can be blamed in part for lacking financial planning. The research found that more than half of the respondents either didn’t know who to trust about financial advice or were afraid of losing their money.
"Consumers understandably are more nervous about investing their money given recent revelations about financial fraud, manipulation and abuse of clients," said Kevin Keller, CEO of the Certified Financial Planner Board of Standards, which collaborated with CFA for the research. "This doesn't mean that people shouldn't create a financial plan and be prepared. We encourage consumers to do their homework and find a financial professional who always puts the clients' best interests first and abides by a fiduciary standard of care."
The research was based on the responses of 1,508 financial decision makers. The research was conducted by Princeton Survey Research Associates International for the non-profit organization The Consumer Federation of America and the Certified Financial Planner Board of Standards.