Americans juggle multiple financial goals through various life stages, but it can be a challenge for many to strike a balance between pursuing short-term needs and wants while saving for the future. People of all ages and incomes make lifestyle choices that affect their immediate financial situation — and often these decisions have long- term effects.
We conducted the Financial Trade-Offs study among three generations of Americans to discover which financial needs and goals they prioritize, and which trade-offs they consciously make to meet these goals. What we found is that most people say they are generally willing to make trade-offs today in order to save for tomorrow. However, their financial actions — and the bills they have yet to pay — suggest they may not always be thinking about what will have the biggest long-term impact.
The data compiled over four years also helps identify meaningful changes from year to year. This provides an indication of how local and national developments may come into play in determining the degree to which individuals feel ready for retirement.
Less studied are the reasons why Americans are so ill-equipped to fund this major life stage. What events have transpired to make retirement financially burdensome even for those who have long planned their exit from the workplace?
The Retirement Derailers® survey conducted in February 2013 explores this question. The results identify unexpected life events, or derailers, that can be culprits in disrupting plans for retirement. The study also reveals the gravity of these events, which have cost Americans an average of $117,000 in savings, and examines how respondents view this shortfall in the context of their overall preparation for retirement. Finally, it highlights how individuals in these situations plan to get their retirement savings back on track.