A recent Guardian Life Insurance Company survey found that Americans are overwhelmed about the prospect of saving for retirement, and they are unsure how life insurance fits in the overall planning. This survey indicates that all Americans are exhibiting uncertainty and, at worst, complete inaction when it comes to financial decision-making.
The survey also revealed persistent uncertainty about the economy, coupled with the belief that it is headed in the wrong direction, as a leading source of anxiety at every life stage about the ability to save for a comfortable retirement.
This sense of being overwhelmed about retirement planning further heightens the distress many Americans are feeling about financial security over the long term. While nearly all respondents (92%) surveyed say they are confident in their personal financial decision-making, almost four in 10 of the general population (39%), and more than half (52%) of Gen Y and one-third of Gen X don’t even know where to begin when it comes to planning for retirement.
Among factors the survey looked at were people’s perceptions of the direction the economy is heading. From a generational standpoint, Gen X (82%) believes the economy is headed in the wrong direction and feels the least financially secure (47%) of any group. Three-fourths of the general population also shares a pessimistic view of the economy’s direction, while more than one-third (37%) do not have a sense of financial security. Gen X members (59%) are also the most concerned that they will not have enough money saved for retirement, perhaps reflecting the sequence of economic forces that have impacted their working lives.
Survey respondents who own whole life insurance were the most confident that they will have saved enough for a comfortable retirement. This feeling of security may be due to their knowledge that the cash value of a whole life policy can be accessed on a tax-advantaged basis for supplementing retirement income. However, among the general population, the survey found that there is a lack of understanding about how different types of life insurance work. Americans in general are divided about whether it’s smarter to buy term life insurance and invest the rest, or to buy whole life insurance and treat it as part of one’s overall financial portfolio (40% each).
As for how their perceptions of the economy have impacted their overall financial decision-making, the survey revealed that two-thirds of respondents from the general population (65%) are more likely to keep their money in a savings account rather than invest it, despite the fact that 62% of them feel that a down market is an opportunity. However, most respondents (60%) still believe it is important to keep investing in their retirement fund because the economy is less stable, with skittish Gen X being the exception: 47% of respondents from this cohort believe investing in their retirement fund is actually less important during this time of economic instability.
Based on survey findings, Gen Xers may have been disproportionately impacted by the turmoil of the economic landscape, but the Guardian survey indicates that all Americans are exhibiting uncertainty and inaction when it comes to financial decision-making.
So what do these results tell us? It says the financial services industry needs to do a better job of educating the consumer across all generations as to how they can and should plan for their financial future, and not just pure financial products, but life insurance too.
This is where the LIFE foundation comes into play. We’ve been educating the consumer for the past 17 years about the different types of insurance and what these products do. LIFE has the resources and the credentials as a non-profit third party to help consumers make these important insurance decisions, but the industry needs to do a better job of accessing and using these tools.