Financial goals increasingly important to Americans -- but are they achieving them?
Retirement planning is the top financial goal for many Americans this year -- and who are they turning to for help?
Despite personal and global financial challenges stemming from the pandemic and its after-effects, Americans remain optimistic about their financial outlook and are increasingly turning to employers to help them meet their retirement savings goals.
However, although the economy showed signs of recovery with unemployment down, the stock market up, and the average 401(k) balance growing to $112,000 last year, Americans remain worried about their finances.
According to a study by Personal Capital, an Empower company, confidence in the economy among Americans was just 40 percent last year, down from 69 percent before the pandemic. During that time, Americans’ confidence in their own financial health plummeted, with only 34 percent indicating they feel financially healthy today compared with nearly half who felt financially healthy a year ago. Those who said their financial health is very unhealthy grew from 9 percent at the start of 2021 to 17 percent by the end of the year.
Many Americans have scaled back their savings goals during the past year, and only a small percentage have been able to achieve them. Those goals include the following:
- having an emergency fund
- saving consistently
- being debt-free
- being able to make large purchases without worrying
- reaching a certain net worth
- being able to retire when they want to
Progress toward all of those goals dropped during 2021, according to the report.
Most Americans indicated they are financially stable, while 36 percent said they are thriving and 16 percent said they are only surviving.
- Those who described themselves as thriving said they have the freedom to spend money on hobbies and other purchases without having to worry.
- Those who felt stable said they are able to pay their bills on time, have some form of retirement savings and could manage an unexpected $500 expense.
- Those who described themselves as surviving said they can buy what they need to live, could handle a minor unexpected expense of $100 and feel their debt is manageable.
Americans say salary and income are still key to financial health
A growing percentage of respondents said salary and income are key drivers of financial health, eclipsing the ability to withstand unexpected financial needs, the factor that previously topped the list. Driven largely by a desire for more income and better benefits, many Americans have begun seeking new opportunities in what has become known as the Great Resignation.
Recent inflation could be offsetting salary gains, with respondents indicating low income and increased expenses are the top barriers to financial health.
But Americans remain optimistic despite their current cloudy outlook and continue to prioritize paying off debt and saving for retirement. Notably, millennials were especially optimistic about being able to achieve their savings goals, building emergency savings and leveraging their financial assets to maximize overall wealth.
Financial goals more popular than before
Financial goals are superseding lifestyle goals for many Americans during the coming year. Thirty-seven percent of all respondents are focusing on paying off personal debt this year and retirement planning was a close second at 36 percent.
An increasing number of Americans are looking to their employers to help them achieve their retirement goals, with 23 percent saying their employer’s retirement savings account provider is an ally in their journey to financial health.
That’s up from 15 percent at the beginning of 2021 and beats out financial advisors, financial services companies, friends and the Internet as trusted sources of help on the road to financial security. (Family was by far the most frequently indicated ally among respondents.)
To achieve their financial goals, 31 percent of respondents said they are focused on learning about retirement planning this year, followed by interest in learning about cryptocurrency, financial account security and investing options.
Kristen Beckman is a freelance writer based in Colorado. She previously was a writer and editor for ALM’s Retirement Advisor magazine and LifeHealthPro online channel. She also was a reporter for Business Insurance magazine covering workers compensation topics. Kristen graduated from the University of Missouri with a degree in journalism.
READ MORE: