Gaye Borden
Wells Fargo Nevada Vice President of Institutional Retirement and Trust

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October 31, 2013
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About half of middle-class pay the bills, but can't save for retirement

More than half of middle-class Americans (59 percent) say paying the day-to-day bills is their top financial concern, while saving for retirement falls to a distant second place in the financial pecking order, according to our annual Wells Fargo Middle Class Retirement study. It’s clear that middle-class Americans (based on those surveyed ranging between the ages of 25 and 75 interviewed by phone in July and August by Harris Interactive) are overwhelmed with trying to meet today’s obligations and consequently are putting off saving for their future. Four in 10 say it is not possible pay the bills and save for retirement at the same time.

So with many not saving now, it’s not surprising that 48% of middle-class Americans aren’t confident they will have saved enough for retirement. Instead, 34 percent say they plan to work until at least age 80 because of that savings shortfall. This is a jump from 25 percent in 2011. Another 37 percent agree they “won’t retire.”

The plan effect

Our retirement research over the past few years has shown that having a written plan makes a big difference for middle-class Americans. This year is no exception. Of those surveyed, 70 percent of those with a written plan told us they felt confident about their future retirement. Only 44 percent of those without that plan echoed that same confidence. In addition, those with a plan said they had more willpower (91 percent) to stick to a savings plan than those without a plan (75 percent).

The higher confidence and willpower that come with a plan also translate to more savings. Those with a written plan have saved three times as much towards their retirement savings goal. The median savings goal for middle-class Americans between the ages of 40-59 was $200,000. Individuals aged 40-59 with a plan in place said they’d saved $63,000 or 32% of the goal. People between ages 40-49 not working from a plan had only saved $20,000.

Not for me’

Our research revealed a perception problem among middle-class Americans when it comes to both financial planning and investing in the stock market. Many told us that neither one applies to them because of their financial situation.

When asked the reason for not having a plan, a plurality (45 percent) says they don’t have a written plan because they had “so few financial assets.” Everyone can benefit from a plan. A simple starting place is to outline a budget that includes putting some money into savings. Consistent saving is the foundation for creating a nest egg for retirement. Small amounts can make a difference over time.

The stock market is also viewed as something that is for “other people.” Among middle-class Americans, 45% stated that “the stock market doesn’t benefit people like me.” I believe there are mixed emotions related to investing, but certainly fear is holding people back. Fifty-two percent say they don’t invest in the market because they fear losing their nest egg in the rise and fall of the market.

What is middle-class America still depending on for retirement income? According to our research, the answer for many is Social Security. One-third agreed Social Security would be their intended “primary” source of income in retirement. Almost half (48 percent) of those making less than $50,000 annually considered Social Security to be their “primary” source of income as they move into retirement.

Fear plays a role when it comes to middle-class Americans’ view of Social Security and its long-term viability for workers. When rating top financial concerns, 37 percent indicated that the “loss or diminishment of Social Security” was their biggest concern, second only to “a large unexpected healthcare expense” (40 percent).

This is especially true for women with 46 percent saying their top financial fear was a loss of or diminished amount of Social Security, compared to 29 percent of men voicing this fear. Fewer women, however, are afraid of losing their nest egg in the stock market (46 percent vs. 58 percent of men).

Realism in their 30s

We surveyed a wide range of ages in our middle-class survey, breaking out findings by decade to spot trends. This year, we found people in their 30s to be the most prepared and realistic about what’s needed when saving for retirement.

For example, those from 30-39 are saving a median of 6% of their annual income for retirement, a higher percentage than those in their 20s or 40s. Estimating the amount for their retirement — a median of $500,000 — is also more in line with what many financial experts use for guidance. Those over 40 only estimated needing $200,000.

More than a third (34 percent)—the highest among all age groups—have a written retirement plan. And 30 percent have confidence in investing in the stock market for retirement — again the highest among other ages. We’re encouraged that this group, while still needing to make strides to achieve their long-range goals, is focused on the right variables when it comes to being successful at saving for retirement.

Every age group can make a difference in their long-term financial future by creating a plan for how to build the retirement nest egg they will need.

Clearly our research demonstrates the importance of having a plan.

Gaye Borden is the Vice President of Institutional Retirement and Trust with Wells Fargo Bank in Nevada. For more information about saving for retirement, please visit or meet with a banker at any of our 119 locations across the Silver State.

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The Nevada Appeal Updated Oct 31, 2013 07:59PM Published Oct 31, 2013 07:59PM Copyright 2013 The Nevada Appeal. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.