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Who thinks they will have enough money to retire? New research finds that it’s not just the 1 percent. Regular folks, many with household incomes of less than $150,000, feel confident they will have enough to retire.
Research from Wells Fargo discovered that 88 percent of Americans it surveyed who had $250,00 or more in investable assets, feel confident they will have saved enough for the life they want in retirement, compared with just 57 percent of those with less than a quarter of a million dollars in investments.
The good news for many is that getting that much saved doesn't require a top-paying job. More than 60 percent of those surveyed with $250,000 in investible assets have a household income of less than $150,000.
The research shows that one thing those who make the $250,000 threshold have in common is that they have a plan for their retirement. More than 70 percent of those surveyed who are considered affluent have a written plan for their finances in retirement, compared with only 43 percent of those with less than $250,000 in assets.
"What is striking about the 'affluent' is that their overwhelming confidence is not from guessing what they’ll need, but from disciplined saving, watching their spending and detailed planning," said Karen Wimbish, director of Retail Retirement at Wells Fargo.
While the majority of the affluent use detailed planning and calculations to estimate the percentage of their current household annual income needed to live on in retirement, the survey revealed that nearly three- quarters of Americans with fewer assets guess at how much they will need.
Besides being better prepared, well-off adults have taken greater strides in saving for their retirement. The study found that the median amount already saved for retirement by the affluent is $500,000, compared with just $60,000 for those with less than $250,000 in assets.
The research shows that the wealthy anticipate that health care costs will be their primary day-to-day financial concern in retirement, as opposed to those without as much in assets who believe the top worry is paying the bills.
"Although the affluent are more financially prepared for their retirement, both groups have grossly underestimated the health care expenses they will need in retirement," Wimbish said. "They need to be more aware and plan for the real costs of health care in retirement."
Not having enough saved will keep a lot of those who are retirement eligible working well into their senior years.
The survey shows that working in retirement due to financial necessity will be a reality for more than a third of Americans with less than $250,000 in assets, compared to only 9 percent of the affluent. A quarter of those with less in assets feel they will have to work into their 80s to have enough saved for retirement.
The study was based on surveys of 1,800 adults between ages 25 and 75.