Workers Failing to Save Enough for Expected Retirement Lifestyle, Wells Fargo Study Finds

Women more likely to feel affected by economic downturn and less certain about retirement

CHARLOTTE - November 5, 2009

When it comes to their retirement, America’s 50-somethings seem to be in a state of denial. Although the recent economic downturn has forced pre-retirees ages 50 to 59 to consider working years longer than they had hoped, their current rate of savings is unlikely to fund the retirement lifestyles they expect, according to fifth annual Retirement Fitness Survey from Wells Fargo & Company (NYSE:WFC).

Only 23% of pre-retirees are saving more for retirement than they were a year ago, the survey found. Most -- 57% -- are saving the same amount, and 20% are now saving less. 67% say their expectations for retirement have changed in the past year, and 56% now expect to work longer by an average of three additional years.

Overall, the financial positions and savings habits of this group are insufficient to last for their expected 20-plus years of retirement:

  • While pre-retirees surveyed expect to need $800,000 for retirement, they have saved only $300,000 (median amounts).
  • Pre-retirees clearly haven’t assessed how long their savings will last in retirement. They expect to live nearly 21 years in retirement, but plan on spending nearly 10% of their savings every year in retirement. The industry recommendation is to withdraw no more than 4% annually.
  • People have been overly optimistic about their investment returns. When they started saving (typically in their 30s), both pre-retirees and retirees expected the value of their investments to grow by 8.7% each year, on average. In fact, the compound annual growth rate of the S&P 500 from 1958 through 2008 was 6.6%.
  • Despite their inadequate savings, nearly two-thirds lack any formal plans for retirement savings or spending strategies. Only 35% of the pre-retirees have a written plan for retirement, and of this group, only 52% say they updated it in the past year during the market downturn.
  • Less than half (40%) wish they had been more proactive about educating themselves about retirement preparation.
  • Only 34% “wish they had cut back more on their previous lifestyle and saved more” for retirement.

“In the wake of the severe economic crisis, we had expected to find people had become more conservative in their savings and spending behavior,” said Lynne Ford, head of Wells Fargo Retail Retirement. “We were surprised to see how few people have increased their rate of savings and how many people in their 50s have no retirement plan at all. For people in the last 10 to 15 years of their working career, the failure to have a thorough retirement plan in place is like driving while blindfolded.”

On behalf of Wells Fargo, Richard Day Research conducted 2,108 online surveys with pre-retirees (ages 50 to 59) and young retirees (ages 55 to 70). Those interviewed were relatively affluent, each having at least $100,000 in household investable assets, excluding real estate. Assuming no sample bias, the margin of error would be +/- 3% for each sample (at the 95% confidence level).

Other top findings of this nationwide survey include:

  • Women are more likely than men to feel affected by the economic downturn, are less certain about their retirement and investing, and regret that they aren’t better prepared. Pre-retired women now expect to retire later than they did a year ago (62%, vs. 50% of men), and 41% now think they’ll need to work in retirement “just to make ends meet” (vs. 32% of men). Women expect they will have to cut back on their retirement lifestyle (60%) more than men (52%).
  • Men are much more confident than women about their ability to maintain their lifestyle in retirement. Among male retirees, 47% say they were “very confident they will have enough money to sustain them throughout retirement at an acceptable level,” vs. only 30% of female retirees.
  • 76% of pre-retirees say the economic downturn has changed their current lifestyles in ways that include less travel, job loss, or reduced income.
  • Travel is the biggest single cutback after the economic crisis, with 46% of pre-retirees and 42% of retirees saying they have eliminated or cut back on travel.

Many of the respondents were very concerned about their finances, with some sounding grim or even traumatized. One respondent reported feeling “very insecure about the market and if the money will hold up,” adding, “I don’t feel like I will ever feel like there is enough.” Another said, “I expect to have insufficient funds to maintain my lifestyle if I live beyond 75 years.” And one pre-retiree said, “A significant portion of my 401(k) evaporated last year. I expect to have to work longer to rebuild the amount I had accumulated prior to last year.”

Women Feel More Affected by Economic Downturn

Compared with men, women are angrier about the economic crisis and more uncertain about their retirement and investing plans.

  • Pre-retired women have saved less toward retirement and are less likely than men to know how much they will need to save before retiring. On average, the pre-retiree women surveyed have saved $250,000 toward retirement (vs. $300,000 for men), and are likelier to be saving less toward retirement compared to one year ago (24% of women vs. 16% of men).
  • 37% of pre-retired women can’t even estimate how much they’ll need before retiring, vs. just 17% of men.
  • Pre-retired women are more likely than men to expect having to cut back on their retirement lifestyle (60% vs. 52%).
  • Among retirees, women are more likely to be “angry” (29%) about the current crisis and its impact than men (21%).
  • More retired women than men wish they had started to save earlier in life (46% of women vs. 38% of men).
  • Among pre-retirees, 45% of women wish they had educated themselves sooner about retirement (vs. 36% of men), and 37% wish they had cut back on their lifestyle to save more (vs. 30% of men).
  • Women are less likely (27%) to be contributing the maximum to their 401(k) plans than men (41%).
  • Pre-retired women tend to be reaching out to their financial advisors more often than before the downturn (27%, vs. 14% of men) -- suggesting greater need for assurance and guidance from these advisors.

Young Retirees More Confident than Pre-Retirees

Compared with pre-retirees, the retirees surveyed (ages 55 to 70) showed a greater degree of confidence in their ability to sustain their lifestyles, the survey found; 71% of this group reported having a pension.

  • Only a third (36%) of retirees have cut back on their lifestyles in the past 12 months.
  • Only 9% of retirees say they were either not very confident or not at all confident that they will have enough money to sustain them through retirement at an acceptable level.
  • Nearly three in five retirees (57%) lack a formal written plan for withdrawing their savings.

The Psychology of the Downturn: Acceptance Trumps Anger, Most Think They Did Everything Right

  • When asked how they feel about the recent economic downturn and their retirement plans, three out of five people (both retirees and pre-retirees) say they are either “accepting” or “optimistic.” However, more than a quarter are angry.
  • 53% of pre-retirees say they did everything right and say the current circumstances couldn’t have been predicted.
  • Half (49%) of pre-retirees wish they had started saving for retirement earlier in life.

Lower Assets, More Concern

Among those surveyed, pre-retirees with fewer investable assets ($100,000 to $250,000) were substantially more concerned about their retirement than those with more than $250,000.

  • Of pre-retirees in the lower-asset group, 75% say they aren’t well prepared financially for retirement, vs. 41% of those in the higher-asset group.
  • 62% expect they will have to cut back on their anticipated lifestyle in retirement due to the downturn, vs. 50% of higher-asset retirees.
  • They are more likely to wish they had started saving for retirement earlier in life (60% vs. 41% for higher asset pre-retirees) and had been more proactive about educating themselves about saving for retirement (50% vs. 34%).

Most Stayed the Course During Downturn

  • Among retirees, most have left their assets in the market in the past year, either maintaining their previous asset allocation (44%) or moving to more conservative equities/funds (30%).
  • Only 15% took assets out of the market and placed them into more conservative investments (e.g. CDs, savings, fixed income/bonds).
  • Half (49%) of pre-retirees hope to get back on track by leaving their assets in the market with no change in allocation strategy. Only one in ten have increased assets in the market seeking growth opportunities.

The annual Retirement Fitness Survey was originated by Wachovia. Wachovia Corporation merged with Wells Fargo & Company at the end of 2008. Members of the media can obtain a full study by contacting Amy Hyland Jones at (704) 383-4995.

For help understanding how to prepare for and live in retirement, visit Wells Fargo’s retirement site at or Wachovia’s retirement site at,,6938,00.html.

About Wells Fargo

Wells Fargo & Company is a diversified financial services company with $1.2 trillion in assets, providing banking, insurance, investments, mortgage and consumer finance through more than 10,000 stores and 12,000 ATMs and the internet ( across North America and internationally.