Your Retirement Readiness Rx: Plan Early and Get Help

Do you feel you’re behind in achieving your financial goals?

You’re not alone. In a recent Prudential survey, nearly three of every four respondents said they felt that way, with overall savings levels and retirement savings the two biggest concerns.

It’s not surprising that those who started planning for retirement at younger ages generally feel more confident. In addition, the survey suggests people who’ve received any type of professional financial advice feel better about their outlook for retirement.

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In other words, what appears to matter most is getting some form of professional financial help — whether that’s an automated online tool, in person, hybrid or something else — and to start saving as early as possible. Those two factors are key to getting on track for retirement success.

A closer look at the numbers

To better understand American perceptions of retirement and savings, Prudential contracted with OnePoll for an online survey consisting of 2,000 respondents. The survey was conducted from March 23-28 with a broad representation of generational groups (e.g., the respondents were evenly split by generation, so 500 each from Generation Z, Millennials, Generation X and Baby Boomers).

The survey focused on a variety of issues, and we were specifically interested in how the age a respondent starts preparing for retirement, in conjunction with using a financial professional, relates to overall retirement readiness.

We found that respondents who started planning at earlier ages are in better shape than those who start later in life, which is not surprising. For example, 58% of respondents who start thinking seriously or planning for retirement between the ages of 31 and 40 would describe themselves as somewhat or very prepared for retirement, compared to just 48% of respondents who started thinking seriously or planning for retirement between the ages of 51 and 60.

The differences in retirement readiness for those engaging with a financial professional, even among those who start planning at an early age, were more startling. Among respondents who reported using a financial professional and who started saving between the ages of 31 and 40, 78% said they are somewhat or very prepared for retirement — vs. just 44% for those who had started saving at the same age, but who had never spoken to a financial adviser.

What’s also interesting is that while only around 69% of all respondents said they were somewhat or very prepared for retirement, there is little difference in the noted level of preparation across the different advice options, whether it be in person, online or even through an employer-sponsored defined contribution plan (e.g., a 401(k) or 403(b)).

In other words, the key to preparing for retirement is getting financial help — not the specific type of help. While there are likely nuanced differences within certain groups (e.g., responses to other questions suggest the comfort of working with different types of financial advice solutions varies by demographic factors such as age and income), overall results suggest working with a financial advice solution (as early as possible) is more important than using a specific type (e.g., the notion that everyone must work with an in-person financial adviser).

Your key takeaways

Households typically have myriad competing financial priorities and an even greater number of products and solutions available to fund their respective goals. This complexity can often lead to choice overload and indecision. Prudential’s survey suggests that preparing for financial goals at younger ages, and in particular getting professional financial advice, is a key to significantly improving household financial health, such as retirement readiness.

The specific type of financial advice doesn’t appear to be materially related to confidence levels. This finding is potentially especially important for younger investors who may not have the assets, resources or interest to engage in person with a financial adviser and could potentially start by using some type of online (i.e., a robo adviser) or largely virtual financial advice solution.

At some point, it may be worth engaging with an adviser (or more robust toolset) as the situation evolves, but getting some form of professional guidance early is the most important factor in feeling confident about your journey to a fulfilling retirement.

The Prudential Insurance Company of America, Newark, NJ. 1071641-00001-00

PGIM DC Solutions is an SEC-registered investment adviser, a Delaware limited liability company and is a direct wholly owned subsidiary of PGIM Quantitative Solutions LLC, and an indirect wholly-owned subsidiary of PGIM, Inc., the principal asset management business of Prudential Financial, Inc. of the United States of America. PFI of the United States is not affiliated in any manner with Prudential plc incorporated in the United Kingdom or with Prudential Assurance Company, a subsidiary of M&G plc, incorporated in the United Kingdom. Registration with the SEC does not imply a certain level of skill or training.  

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