Pre-retirees send message to younger generations: Start saving in your 20s and put it on auto-pilot.

Nearly half of pre-retirement Americans find it difficult to save anything beyond what they’re automatically putting away.


Many wish they had used more automatic savings options to build their nest egg.
7 in 10 pre-retirees regret their late start to saving and wish they had focused sooner.
The magic age for saving seriously? 26 years old.


NEW YORK, August 31, 2015—Pre-retirees report a high level of confidence when their savings are on auto-pilot through automated vehicles including direct deposit into a 401k plan, a mortgage, or permanent life insurance, according to a new survey of pre-retirees between the ages of 50 and 62 with a household income of at least $80,000.

The survey asked about specific automatic savings vehicles that help pre-retirees save in a disciplined, recurring way and revealed that nearly two in three (64%) report that this type of saving gives them more confidence heading into retirement than other forms of savings. But problematically, nearly half of pre-retirees (46 percent) say it is difficult to save additional funds outside of their automatic savings vehicles given all of the financial demands they are facing. Almost half (45%) express a desire for more automatic savings vehicles to add to their savings plan.

Pre-retirees also felt they got a later start to saving than they would have wanted. Respondents report having begun a serious savings plan at 34 years of age on average, but wish they had started an average of eight years earlier—making age 26 the “magic age” to kick off a meaningful savings program. Some were even more concerned about when they started seriously saving: one quarter of pre-retirees wished they had started saving more than 10 years earlier. The study was conducted by Ipsos Public Affairs and commissioned by New York Life, the nation’s largest mutual life insurer.

“This is a wake-up call to younger generations, Gen X, Gen Y and even Gen Z. Pre-retirees sit in an important vantage point—they are in a position to share what has worked well for them as they inch toward retirement,” said Chris Blunt, president of New York Life’s Investments Group. “These 50 and early 60 year olds wish they had started a serious savings plan in their 20s and finding ways to put savings on auto-pilot is the key to that plan. There is still time for earlier generations to react to these two pieces of advice.”

In addition, the survey revealed:


  • Pre-retirees with children living at home find it even more difficult to save outside of their automatic savings vehicles with 58 percent reporting that it is difficult;
  • Men more than women are confident in their automatic savings, with 68 percent of male pre-retirees and 59 percent of women reporting more confidence in their auto pilot savings than in other forms of savings;
  • Pre-retirees with children living at home are more apt to want more automatic savings vehicles in their savings plan, with 58 percent wishing for more, compared to 45 percent of all pre-retirees; and
  • There are very high levels of consumer confidence in a number of automatic savings vehicles. Among those who utilize these vehicles, large majorities have confidence that they will help them achieve financial goals:
    • 93 percent are confident in their direct deposit to 401k/403b
    • 81 percent are confident in their the college savings plan
    • 79 percent are confident in their mortgage
    • 78 percent are confident in their permanent life insurance

“These savings vehicles often fly under the radar, but are kind of a big deal. The ease and recurring nature of these savings methods make them highly effective tools for helping clients to achieve their financial goals,” added Mr. Blunt. “We are pleased to see a high level of confidence in permanent life insurance among pre-retirees, who most likely purchased the life insurance years, even decades earlier. I often ask clients to consider this question: will you at 70 like the financial decisions you made at 40? While it is hard to know exactly, this survey gives us part of the answer: be especially mindful of the value of automatic savings vehicles; your future self will be happy you did.”


Methodology


This survey was conducted online by Ipsos Public Affairs in July 22-26, 2015 among a national sample of 906 U.S. adults between the ages of 50 and 62 with a household income of at least $80,000, and who reported that at least one person in the household was not yet retired. This included 762 respondents who currently have a forced savings vehicle. The precision of Ipsos online polls is measured using a credibility interval. In this case, the poll has a credibility interval of plus or minus 3.7 percentage points for all pre-retirees, and plus or minus 4.0 percentage points for pre-retirees with an automatic savings vehicle.

New York Life Insurance Company, a Fortune 100 company founded in 1845, is the largest mutual life insurance company in the United States* and one of the largest life insurers in the world. New York Life has the highest possible financial strength ratings currently awarded to any life insurer from all four of the major credit rating agencies: A.M. Best (A++), Fitch (AAA), Moody’s Investors Service (Aaa), Standard & Poor’s & (AA+).** Headquartered in New York City, New York Life’s family of companies offers life insurance, retirement income, investments and long-term care insurance. New York Life Investments*** provides institutional asset management and retirement plan services. Other New York Life affiliates provide an array of securities products and services, as well as retail mutual funds. Please visit New York Life’s website at www.newyorklife.com for more information.

 

 

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Further Reading
  • Based on revenue as reported by “Fortune 500 ranked within Industries, Insurance: Life, Health (Mutual),” Fortune magazine, 6/15/15. For methodology, see http://fortune.com/fortune500/. 
  • Individual independent rating agency commentary as of 8/11/15. 
  • New York Life Investments is a service mark used by New York Life Investment Management Holdings LLC and its subsidiary, New York Life Investment Management LLC.