Wanna dress up as something really ghastly for Halloween? How about a homeless senior?
A new survey conducted by insurance and financial services company Country Financial shows nearly a third of Americans are worried about retirement. Country asked about Americans’ biggest financial fears, and found they ranked like this…
- Being able to retire comfortably — 28 percent
- Health care expenses — 18 percent
- Affording rent or mortgage — 11 percent
- Job security — 10 percent
- Credit card debt — 6 percent
- Affording your child’s education — 5 percent
Nearly half of Americans don’t keep track of their monthly spending, said Joe Buhrmann, manager of financial security field support at Country. As a result, 51 percent rated their financial security as “poor” or “fair.”
“There’s still a lot of concern about day-to-day finances,” Buhrmann said. “More than half of people surveyed don’t have a monthly budget.”
Why retirement is the top concern
If you think rich people worry less about money, think again. The survey found that families with more money per household worry more about being able to retire comfortably — specifically, those making between $100K and $175K are 43 percent more likely to worry about maintaining their lifestyle through retirement. Because their lifestyle costs more.
“It ties directly into how much income you will have to create in retirement,” Buhrmann said. “If you only need $3,000 a month worth of income, and Social Security is providing most of that, it’s not a huge concern. But if I’m needing 6 or 10 thousand dollars a month in retirement, I’m responsible for creating a much bigger piece of that pie.”
Age is more than just a number
Your age often dictates what scares you most. Millennials, or those 29 and under who were surveyed for this study, were far more likely to list their top fear as rent or mortgage payments. This is because many of them have significant amounts of college debt, Buhrmann said.
“These are the ones who came out of the Great Recession, so they’ve been struggling in a more difficult job market, perhaps some periods of unemployment or underemployment,” he said.
Young people are also more likely to be renting in expensive urban places, he said.
“Too much month, too little money”
Buhrmann said that as credit and debit cards have made it easier to pay expenses, they’ve also made it harder to control spending.
“A lot of it comes down to setting priorities,” he said. “Nearly half of families don’t keep track of discretionary spending. There’s too much month, and too little money — in other words, you’re not managing your cash flow.”
Too many people run out of money a few days before their paycheck arrives, and “float” the rest with a credit card or other expensive tricks, like payday loans. To avoid this, Buhrmann said he and his wife used the envelope system — pulling out the cash needed for the month’s expenses and dividing it into envelopes by category, like “rent” and “food.” When cash was tight, they’d have to decide whether to spend vacation savings or money for the kids’ clothes on groceries.
“In today’s bill-less economy, you carry a piece of plastic, and a lot of the transactions aren’t real,” he said. “A four-dollar latte, a ten-dollar salad at lunch — those don’t feel real.” Cash does.
If you’re adverse to separating your cash into different expense categories, Buhrmann recommends looking into hiring a financial planner.
“One of the things we saw was those who worked with a financial planner felt a lot less stress from family and friends,” he said. “There’s a lot of peer pressure out there. Right now there’s an arms race among parents to see who can schedule the most after-school activities.”
But among those who work with a financial planner, less than 1 in 4 reported feeling that same stress and pressure by friends or family members.
“Working with a financial planner can shine a light in the dark corners of the closet and help you see what’s there,” he said. “And knowing what’s there can be comforting.”