Survey Shows Retirement Planning A Major Concern

In the 2009 National Consumer Survey, conducted by the Certified Financial Planner Board of Standards, 1,742 consumers were asked in May and June about their major financial concerns and the steps they’ve taken to address them. A majority of respondents, about half of whom have more than $1 million in investable assets, said they are worried about managing retirement income, keeping their health care insurance, handling debt, and building a retirement fund. Yet 64% have never had a written financial plan, 11% had one once but not now, and 8% have a plan that needs to be updated. Only 17% have a current, written plan. Among those who have a financial plan and work with a financial advisor, 65% said they have benefited from the process. Among those with a written plan but no advisor, just under half said the plan has been helpful. “Clearly, consumers who have a financial plan are more confident that their finances are in order and that they can reach their financial goals,” says Kevin R. Keller, CEO of the CFP Board.

Those without a written plan cited a number of reasons for not having one:

• 42% said their financial affairs weren’t complicated
• 42% said it was too costly to hire a financial planner and develop a plan
• 41% said they do their own informal planning
• 40% said they get along fine without a plan
• 30% said it’s hard to know who provides the best planning services
• 24% said they don’t really know what is in a financial plan and how it benefits people
• 20% said they couldn’t trust the recommendations of financial professionals

The survey notes that 36% of respondents who work with an advisor said they’ve turned to the advisor more often during the global economic crisis that began in October 2008.

The higher the respondents’ income, education level, and asset level, the more likely they are to employ a financial advisor and follow a financial plan, the survey shows. For instance, about one in four with a high school education has a written and updated plan in place, compared with 49% of college graduates. Just 26% of those with household income below $50,000 a year have an updated plan, compared with 53% of those with income exceeding $150,000 a year. In terms of asset levels, a quarter of those with assets of less than $100,000 have an updated plan, compared with 53% of those who have from $100,000 to $1 million in assets, and 67% of those with $1 million or more .

“Americans of every type of background and income level think carefully about their assets and how to improve their financial state,” says Eleanor Blayney, a consumer advocate for the CFP Board. “Yet many don’t realize that anyone, regardless of wealth or social status, can benefit from having a financial plan.”

Among all respondents, 59% listed generating current income as a top financial concern. Other top concerns included:

• Providing health insurance coverage (55%)
• Managing or reducing current debt (53%)
• Building a retirement fund (51%)
• Building an emergency fund (47%)
• Preparing for future family medical needs (42%)
• Managing retirement income (40%)
• Providing life insurance coverage (35%)

These answers varied widely according to respondents’ levels of education, income, and assets. For instance, 56% of those with a high school education cited “managing or reducing current debt” as a major concern, compared with 48% of college graduates. That worry was also cited by 58% of those earning $50,000 or less and 41% of those earning $100,000 or more, and by 61% of those with assets of less than $100,000 and 45% of those with assets between $100,000 and $1 million.

Creating and maintaining a financial plan can be an effective way to get and stay on track to reach your life goals. If you don’t have a written, updated, and comprehensive plan to guide you to financial success, we can help you in this vital area.