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Thrivent Retirement Readiness Survey finds few Americans have achieved their retirement planning goals

Survey reveals financial concerns, like persistent inflation and future healthcare expenses, are impacting people's level of retirement preparedness

MINNEAPOLIS — Only 40% of Americans have ‘very much’ or ‘somewhat’ been able to achieve the retirement planning goals they have set for themselves, according to a new Retirement Readiness Survey* by diversified financial services leader Thrivent. Not surprisingly, most Americans express mixed feelings about their retirement. While 57% of retirees and 43% of non-retirees feel confident about retirement, many from each group also report feeling anxious (19% and 41% respectively) and overwhelmed (14% and 34% respectively) about what is to come.

Influencing this sentiment could be the current financial environment, which is challenging people’s ability to either build or preserve their current level of savings. Survey respondents also cited financial unknowns in the future, such as looming healthcare expenses and possible cutbacks to federal benefit programs, like Social Security, that may add further complexity to retirement planning.

Only 5% of those nearing retirement said they have everything fully planned out and are 100% ready for retirement, while 19% in this group said they’ve done a great amount of planning and 32% a good amount of planning. This leaves 44% of near retirees who fall into the category of executing minimal to no retirement planning, leaving them at risk of not meeting their financial goals. In fact, some who already have entered retirement regret not saving enough (39%), starting to save too late (25%), or not saving consistently (22%).

"Planning for retirement is a complex process to begin with, but when we add in factors like inflation, market volatility and other unknowns, it becomes even more challenging to figure out how we'll be able to achieve our goals," said Doug Grove, VP of Wholesaling & Sales Support at Thrivent. "Our survey data reinforces the importance of having a comprehensive retirement plan that accounts for the different scenarios that may emerge in the future. This will help people enter the next phase of their lives feeling more financially confident and secure."

Inflation is hindering retirement savings   
With inflation impacting many aspects of our financial picture, it’s not surprising that survey respondents reported this as a top concern across the board, whether they are still in the savings stage, approaching retirement, or already in retirement. Sixty-six percent of adults said they expect to be impacted by inflation upon reaching retirement, and 67% who are currently retired are concerned about the impact it is having.

A general rule of thumb is to factor in inflation between 2-4% when planning for retirement. The high levels of inflation we’ve seen over the last several months, however, can have a deeper impact on savings, especially for retirees living on a fixed income. Inflation could drastically affect their budgets and day-to-day expenses, and may draw down their nest egg more quickly than they were anticipating. Inflation also can prevent younger savers from building savings because they feel constrained by higher prices. Indeed, Thrivent’s survey found younger generations are less focused on saving for retirement than older generations, as they concentrate on immediate savings (56%) and in-the-moment spending (51%). Nearly two-thirds of survey respondents in this group said they recognize they should be saving more (64%).

"Inflation makes it even more important for people to be proactive about regularly reviewing their finances," said Grove. "For younger savers, that means accounting for the ebb and flow of inflation and economic shifts as they build their financial strategies. For those nearing or approaching retirement, now is a good time to review investment portfolios to help hedge against the long-term impacts of inflation. This involves reviewing your overall investment objectives, risk tolerance, and determining if any adjustments are necessary."

Healthcare exposes gaps in retirement planning  
According to the Centers for Medicare & Medicaid Services, national health spending grew to $4.1 trillion or $12,350/person in 2020.1 This is a huge sum for those who haven’t planned for it. With health care policies constantly in flux and fluctuating prices for prescription drugs and insurance premiums, it’s important to plan for future care scenarios, yet Thrivent’s survey found few have taken this critical step.

While this is on the radar for some—2 in 3 adults nearing retirement say they have spent serious time thinking about their future healthcare needs in their retirement planning—only 15% of them said they have spent a great deal of time focusing on this and feel confident in their level of understanding. Meanwhile, 11% haven’t spent any time at all thinking about healthcare expenses or potential implications for retirement. This presents an important opportunity for financial advisors to coach their clients on this key aspect of planning. 

“Many people falsely believe a combination of government benefit programs, along with their existing savings, will be enough to cover all of their healthcare expenses in retirement,” said Grove. “While it may cover a portion of expenses, people may find their existing coverage is simply not enough to provide them with adequate protection, especially if they face a sudden and unexpected health event that requires ongoing, specialized care. At this stage, it may be too late to find and purchase the level of insurance protection that’s needed to support care.”

Young people are thinking about retirement and want to become better educated
Despite contending with inflation and other financial pressures, Thrivent’s survey found retirement planning is top of mind for many young adults, with 73% saying they’ve started to seriously think about it.

"It's encouraging to see a large percentage of young savers are thinking about this topic early in their careers," noted Grove. "As a next step, financial advisors can help them identify their desired retirement outcomes and develop concrete goals they can start working toward."

As part of ongoing planning conversations, there is room to help younger savers become more educated about the savings vehicles and approaches that could help them achieve key retirement goals. Relative to the overall population, the survey found younger savers are less educated about retirement savings plans like IRAs (37%), home equity or other real estate assets (40%), and employer sponsored plans (48%). What is particularly striking is less than half of adults surveyed are taking advantage of an employer plan or personal IRA. This is an especially valuable step for young savers, who should ideally start accumulating savings on a tax-advantaged basis as soon as possible.

There is a strong appetite for this and other kinds of advice among all pre-retirees, with nearly 60% expressing interest in increasing their knowledge across retirement topics such as Social Security, compound interest, inflation, and healthcare. This reinforces the key role financial advisors can play in educating clients and helping them plan appropriately for future scenarios.

While Thrivent believes in-depth retirement planning is best done in consultation with a financial advisor who is close to an individual's unique goals and dreams, we're offering the below pieces of advice that may be helpful at any stage in the planning process.

1) Establish a retirement timeline with your desired outcomes in mind.
Before people can develop their retirement strategies, they should think about their timeline, which ultimately depends on the outcomes they’re hoping to achieve. It’s common to prioritize the math and just think about the total amount that needs to be saved in order to retire comfortably. But it’s equally important to think about how that money will be used and spent over the years.

As people start to think about their timeline, here are a few helpful questions to serve as a guide:

  • How many years are they planning for? People should factor in personal health considerations and circumstances that may affect this.
  • Where do they want to live? This could depend on a variety of factors, including wanting to live near family, type of home and cost-of-living considerations, and accessibility to health and caregiving facilities.
  • What passions will they pursue? Ending a career opens up new possibilities for people to think about their role in community and how they want to use their time and talents.

How will they distribute their assets over time? People spend their working years building up their nest eggs, but if they don’t have a distribution plan, they’ll be sitting on what they’ve worked so hard to accumulate.

Once people have done this important legwork, they’ll be in a great position to meet with a financial advisor who can help them review their assets and figure out how they can use money as a tool to achieve their desired retirement outcomes.

2) Gather an inventory of what you have – and identify potential gaps.
For many people, the next step in building their retirement strategy will involve taking an inventory of what they currently have, which will also expose any gaps they have yet to fill. At Thrivent, we believe this is best done in partnership with a financial advisor who can help ensure people are getting the most comprehensive picture of their finances.

During this phase, people should assess all aspects of their finances, including reviewing their investments, employer or pension benefits and guaranteed income sources. It’s never too early to start planning for healthcare, either. Along with their spouse or partner, people should try to prioritize getting regular check-ups so they can start to forecast what their future healthcare expenses may look like.

3) Consider different scenarios to stress test your retirement strategy.
Because there are many variables and assumptions involved in planning for the future, people should consider the different scenarios that may impact their strategies and distribution plans, including:

  • Taxes
  • Inflation
  • Health events
  • Longevity
  • Possible market downturns
  • Other roadblocks, including debt, spending shocks or loss of a job

A financial advisor can help people forecast how these variables may impact their strategies and work with them to build in some flexibility into their plans, including exploring financial solutions that may help buffer against possible losses.

4) Execute your strategy.
For those who are approaching retirement or are already retired, their focus will turn from accumulation to distribution, as they figure out how to manage withdrawals from their accounts to meet their everyday needs. Now being on a fixed income, people will need to consider how their money will fit into their budget and expenses, while keeping enough room to pursue other passions.

5) Review your strategy regularly to ensure you’re on track.
Just like a broader financial strategy, thinking about retirement is never “one and done.” People’s retirement outcomes may change as they advance in life and in their careers, and their financial circumstances may ebb and flow, too. People should review their retirement strategy on a regular basis with their financial advisor so they can determine if they’re still on track or if they need to make any modifications.

As Thrivent’s survey revealed, there are many challenges that come with planning for retirement in today’s environment. But it also presents people with an incredible opportunity to uncover what’s most important to them. It’s a time to consider how money decisions can help people achieve their most important goals in a way that truly aligns with their values. This level of planning will bring people one step closer to achieving financial clarity, enabling lives full of meaning and gratitude.

1Centers for Medicare & Medicaid Services National Health Expenditure Data – Historical

About Thrivent
Thrivent is a diversified financial services organization that helps people achieve financial clarity, enabling lives full of meaning and gratitude. Thrivent and its subsidiary and affiliate companies serve more than 2.3 million clients, offering advice, insurance, investments, banking and generosity products and programs over the phone, online as well as through financial professionals and independent agents nationwide. Thrivent is a Fortune 500 company with $189 billion in assets under management/advisement (as of 12/31/21). Thrivent carries an A++ (Superior) rating from AM Best, a credit rating agency; this is the highest of the agency’s 13 rating categories and was affirmed in June of 2022. Rating based on Thrivent’s financial strength and claims-paying ability. Does not apply to investment product performance. For more information, visit Thrivent.com. You can also find us on Facebook and Twitter.

Insurance products, securities and investment advisory services are provided by appropriately appointed and licensed financial advisors and professionals. Only individuals who are financial advisors are credentialed to provide investment advisory services. Visit Thrivent.com or FINRA's BrokerCheck for more information about Thrivent's financial advisors.

About Morning Consult
Morning Consult is a global decision intelligence company changing how modern leaders make smarter, faster, better decisions. The company pairs its proprietary high-frequency data with applied artificial intelligence to better inform decisions on what people think and how they will act. For more information, please visit morningconsult.com.

*Methodology
This research was conducted in June 2022 among a national sample of 1,500 adults in order to measure their sentiments, financial planning, knowledge, and issues regarding retirement. The interviews were conducted online and the data was broken into three sample groups; Saving, Nearing, and Retired. Results from the full survey have a margin of error of plus or minus 3 percentage points.

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