Working in Retirement is the New Normal for Middle Class Americans, Wells Fargo Retirement Survey Finds

Three in Four Americans Expect to Work through Retirement Years; Average Americans Woefully Underfunded, with Less Than 7% of Desired Retirement Nest Egg Saved; 20-Somethings Least Confident in Stock Market and 40-Somethings Most Stressed

CHARLOTTE, NC - December 8, 2010

For middle-class Americans, retirement simply means a new phase of their working years, according to results from the sixth annual Retirement Fitness Survey from Wells Fargo & Company (NYSE:WFC). The survey found that 72% of middle-class Americans between the ages of 25 and 69 expect to work through their retirement years. The trend is driven both by deep deficits in personal retirement savings – 39% say they “will need to work” to make ends meet or maintain their lifestyles – and also by lifestyle choice, with 33% saying they will continue to work because they want to.

Middle-class Americans, especially those under 50, increasingly know that retirement is a do-it-yourself endeavor. Only two in five (40%) of those surveyed said they think Social Security will be available throughout their retirement – including only 20% of 20-somethings and 22% of 30-somethings. All five generations surveyed voiced strong support for changes in 401(k) plan design and regulation that would enable more guidance and advice to help people to save more.

While many Americans express worry about their retirement prospects, judging from their finances they probably aren’t worried enough. Respondents predict they will need a nest egg of $300,000, but have saved just $20,000 of that amount for retirement (figures throughout are medians, the midpoint of responses). They expect to live on retirement savings for nearly two decades (19 years), while planning to spend 10% of their nest egg every year. The industry recommendation is to withdraw no more than 4% annually.

The median retirement savings of respondents age 50 to 59 is $29,000. Stretched out to fund a retirement of 20 years, these savings would amount to about $190 a month (assuming a 5% rate of return). Yet, 56% of the 50-somethings say they are “confident or very confident” they’ll have the money they need to support their desired lifestyle throughout retirement.

“Too many Americans have their heads in the sand in the face of obvious savings deficits,” said Laurie Nordquist, director of Wells Fargo Institutional Retirement and Trust. “People are not even close to where they need to be in total savings. Barring a miracle, a winning lottery ticket or a big inheritance, they’re going to be forced to dramatically cut back their lifestyles after retirement.”

However, Nordquist noted, there is one bright spot. “Americans seem to get that retirement planning is now in their hands, which is a start in terms of taking control,” she said.

On behalf of Wells Fargo, Harris Interactive Inc. conducted 1,756 telephone interviews of middle income Americans in their 20s, 30s, 40s, 50s and 60s, surveying attitudes and behaviors around planning, saving and investing for retirement. The interviews were conducted between September 9, 2010 and October 7, 2010.

Other top findings include:

  • 20-somethings are the least confident about investing in the stock market, and are most likely to put their savings in a bank CD rather than invest in stocks.
  • 40-somethings are under the most financial stress of any age group. They are dramatically less likely to have pensions than older workers, and economic strains are most likely to be causing tension in their households. 80% of them expect to work through retirement, vs. 54% of 60-somethings.
  • Those surveyed expressed strong support for reforms that would encourage additional saving. Respondents overwhelmingly (79%) want employers to offer more advice to help manage their retirement plans – guidance that is difficult for employers to provide under current regulations.
  • Only a third (33%) of those surveyed have a detailed written retirement plan.
  • Compared with Americans who are married or partnered, single Americans are more confident in the future of Social Security and expect to spend less on healthcare during retirement.
  • Two thirds (65%) believe they should be saving more and could be if they got more guidance or advice.

Generational Shift: Dramatic Drop in Pensions

“People in their 50s and 60s are the last generations that can depend on traditional pensions, and their confidence level as they approach retirement reflects that,” said Joe Ready, director of Wells Fargo Institutional Retirement and Trust. “In the younger age groups, we’re seeing that individual savings efforts, whether through 401(k)s or IRAs, are much more important than to older generations, most likely reflecting the reality that they know they are responsible for their own retirement.”

The survey found significant differences between age groups, both in attitude and in degree of financial preparedness.

  • 20-Somethings: Once Bitten, Twice Shy on Stocks – 20-somethings are the most confident when it comes to feeling they are “on track for retirement” (71 %). However, they have the lowest level of confidence among all of the age groups about the stock market as a place for investment gains (31% are confident vs. 40% of 40-somethings), and would be the most likely to put their savings in a bank certificate of deposit rather than invest in the market (40% vs. 29% of 40-somethings) if given $5,000 to invest for retirement. This could threaten to compound the damage that the economic downturn has done to their economic future. Not only are they entering the weakest job market in years, they’re putting their money in safe investments with the least chance of long-term appreciation.
  • 30-Somethings: Sandwiched in the Middle – Perhaps reflecting their status as a sandwich generation, needing to support their children and their parents, 30-somethings are most likely (33%) to say that the needs of parents, children, or other family members will affect their retirement plans. They also anticipate the highest health care costs in retirement.
  • 40-Somethings: Under Stress – 40-somethings are the most stressed about retirement. They are the least likely of any group (48%) to express confidence in their ability to save enough to live the retirement they want, while 60% say they don’t have extra money to save for retirement. They also have the highest proportion of all groups who think inflation (47%) will impact their ability to retire and are the generation most likely to be reducing debt (79%). And they are by far the most likely to say that money matters have increased the tension in their households since the economic downturn (61%, vs. 39% for 60-somethings).
  • 50- and 60-Somethings: Excited – People in their 50s and 60s are the most likely to be excited and looking forward to retirement, and are the most confident in continued availability of Social Security. They are also the most likely to expect pensions as a source of retirement income (59% of 60-somethings and 55% of 50-somethings have pensions, vs. 36% of 40-somethings, 32% of 30-somethings and 27% of 20-somethings).

Strong Support for Retirement Reforms

Respondents expressed strong support for a number of measures that would enable and encourage additional saving. Asked whether employers should provide more personal advice services to help employees manage their 401(k)s, 79% of respondents agreed. A similar number (82%) agreed employees should be offered a lifetime income option in their retirement accounts, which could be more prevalent with clearer regulatory guidelines.

Two-thirds (65%) expressed agreement that, for those without access to a 401(k) or similar plan, an equivalent system should be created. Of those with a 401(k) and company matching contribution, 85% said they contributed as much as their company will match, suggesting this is an effective incentive.

Impact of the Recession

When asked about the impact of the recession on their financial management and retirement expectations, respondents reported that:

  • 71% are actively working to reduce debt.
  • Two-thirds (65%) of people say they’re not very confident or not at all confident that the stock market is a place for investment gains for their savings.
  • 55% say they have other financial priorities and don’t have extra money to save.
  • One-third are worried about a job loss in their household in the coming year. Forty-somethings (43%) and fifty-somethings (42%) are most worried about this.
  • People making $75,000 to $100,000 a year have outsaved those making $100,000 and up, with a median of $99,000 in total investable assets, vs. $59,000 saved by those making $100,000 and up.

What, Me Worry?

The survey found that only 33% have a detailed written retirement plan. A similar number (37%) don’t know how much they’ll need and/or can’t estimate how long they’ll be able to live on what they have saved. Yet more than half (58%) are confident that they’ll be able to retire comfortably. Almost two-thirds (62%) say they have not changed their retirement savings rates in the two years since the recession began and only 16% have increased it.

Healthcare Tops List of Concerns

Survey respondents said their fear of healthcare costs using up their retirement savings outweighs their fear of market volatility. Close to half (47%) said healthcare costs would have a high impact on their ability to retire, compared to 37% citing inflation and 28% citing volatility of savings/investment returns.

  • Respondents say they anticipate spending a median of $32,000 on post-retirement healthcare costs, which would consume more than the entire $20,000 they have currently earmarked as retirement savings.
  • More than four in ten respondents (44%) expect health care will cost them more than $50,000 in out-of-pocket costs during retirement.

Single Americans More Confident

Compared with Americans who are married or partnered, single Americans:

  • Are more likely to be “very confident” of having enough to retire on comfortably (25% among unmarrieds vs. 17% among marrieds).
  • Are more likely to believe Social Security will be available to them during their entire retirement (47% vs. 37%).
  • Expect to spend less on healthcare after retirement ($24,000 vs. $36,000).
  • Are contributing more to their 401(k) or similar plans (9.7% of annual income for unmarrieds vs. 8.0% for marrieds).
  • Are less likely to be contributing to an IRA (23% vs. 30%) or to say they can depend on their brokerage accounts as a source for retirement income (47% vs. 55%), but are more likely to have or expect a pension (55% vs. 41%).

Easterners Save Less, Worry More

  • Easterners are most likely (23%) to say the inability to meet day-to-day expenses will have a high impact on their ability to retire, vs. 20% in the Midwest, 15% in the South and 12% in the West.
  • Only 10% of Easterners say they have increased their rate of retirement savings in the past two years, vs. 19% of Westerners and Southerners.
  • Westerners are most likely (37%) to have cut back on discretionary spending due to the recession; Southerners the least likely (27%).
  • Southerners are least concerned that they or a household member will lose their job in the next year: 70% of Southerners were not concerned, vs. 61% of Easterners.
  • Midwesterners are the most skeptical about the future of Social Security, with only 35% believing it will be available to them during their entire retirement, vs. 44% of Westerners.

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

About the Survey
On behalf of Wells Fargo, Harris Interactive Inc. conducted 1,756 telephone interviews of middle class Americans in their 20s, 30s, 40s, 50s and 60s, surveying attitudes and behaviors around planning, saving and investing for retirement. To target the middle class, the survey included only respondents who fell within specified income and wealth brackets. Those aged 25 to 29 had household income of $25,000 to $99,999 or investable assets of $25,000 to $99,999. Those aged 30 to 69 had household income of $40,000 to $99,999 or investable assets of $25,000 to $99,999. The lower income limit for 20-somethings was used to reflect the early stage of their careers. For the 20s age group, only respondents aged 25 to 29 were included in order to focus on workers.

Data were weighted as needed to represent the population of those meeting the qualification criteria. Figures for education, age, gender, race/ethnicity, region, household income, investable assets, number of adults in the household, and number of phone lines (to adjust for probability of selection) were weighted where necessary to bring them in line with their actual proportions in the population.

About Wells Fargo
Wells Fargo & Company (NYSE: WFC) is a nationwide, diversified, community-based financial services company with $1.2 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 9,000 stores, 12,000 ATMs, the Internet ( and, and other distribution channels across North America and internationally. With more than 278,000 team members, Wells Fargo serves one in three households in America. Wells Fargo & Company was ranked #19 on Fortune’s 2009 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy all our customers’ financial needs and help them succeed financially.

About Harris Interactive
Harris Interactive is a global leader in custom market research. With a long and rich history in multimodal research that is powered by our science and technology, we assist clients in achieving business results. Harris Interactive serves clients globally through our North American, European and Asian offices and a network of independent market research firms. For more information, please visit