Editor’s Note: This story originally appeared on NewRetirement.
A recent study, the 2022 Schroders US Retirement Investigationreports that just 22% of people approaching retirement age believe they will have enough money to maintain a comfortable standard of living, down from 26% a year ago.
Only 1 in 5 people are ready for retirement. Most people think they haven’t saved enough, especially with potentially deteriorating economic conditions.
If you’re concerned about your financial prospects, don’t worry. You have this. Here’s how to improve your financial outlook.
The 1 simple step to improving your financial outlook
Let’s start with the good news. It sounds simple, but developing and maintaining a holistic financial plan has proven to be an effective catalyst for better financial prospects.
The Schroders survey found that of those who have done retirement planning, 91% say it has been helpful to them, with 33% saying it has been essential in putting them on a better path to retirement.
Other surveys report similar data. For example, Charles Schwab finds that people with written plans feel more confident and less stressed. Plus, research shows that people who have plans make better decisions, develop better financial habits, and have better financial results.
So why aren’t more people planning?
Among Schroders respondents without a plan, 76% find the idea of planning overwhelming and 56% think it doesn’t make sense because life is so uncertain.
Are they right?
Overwhelming: Yes, planning can be overwhelming, especially if you’re not comfortable with personal finances. However, new online tools like the NewRetirement Planner are intended to facilitate the construction of a step-by-step plan.
Uncertainty: Yes, there are many things you cannot predict. However, this is why you have backup and contingency plans. And, you can develop conservative strategies to ensure your money lasts as long as you do.
Planning means setting goals and knowing how to handle things when they don’t go your way.
“Given the relatively small percentage of Americans who have taken the time to create a specific plan to generate enough assets for retirement, it’s no surprise that many believe a dream retirement is out of reach. reach,” said Midstream Distribution Manager Joel Schiffman. for North America at Schroders.
The economic uncertainty we face coming out of the pandemic has people worried about their financial prospects.
65% fear inflation will lower asset values
Yes, inflation is a valid concern.
However, the price spike is not expected to last long and the effects can be largely mitigated. In fact, a recent investigation of NewRetirement subscribers (people who maintain a holistic financial plan) have found that:
- 48% had enough wiggle room in their budget to largely ignore inflation.
- 42% are reducing their discretionary spending.
53% are worried about a major market downturn
Yes. We are actually in the middle of a market downturn.
Stocks are bouncing around lows last seen a year ago. But the gains remain well above the lows we saw in March 2020 at the start of the pandemic.
We are very likely to regain recent losses.
And there is a lot you can do to mitigate the losses. Explore “What to do when your investments go down? »
49% have anxiety about healthcare costs that are draining their savings
According to Fidelity Investments’ Retiree Health Care Cost Estimate report, a 65-year-old couple retiring in 2022 can expect to spend $315,000 on health and medical expenses throughout retirement.
That’s more than a lot of people have saved. Also, it does not include the possibility of having to fund a need for long-term care.
Use the NewRetirement Planner to get a personalized estimate of your projected healthcare expenses and to explore how to fund long-term care (you have lots of options besides insurance). So explore “12 Surprising Ways to Save on Retirement Health Care Costs.”
49% think they won’t be able to afford the lifestyle they want
When it comes to finances, it’s easy to focus on savings balances, inflation, and investment returns. And, while you have some control over these things (especially if you have a plan), a lot is beyond your control.
What do you control? You know what you expect from your life. And, it’s important that you continue to focus on what you want – prioritize and compromise to live the life you want.
And, no matter how much savings and investments you have. There are other financial levers available to you that will allow you to achieve your goals.
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