Americans must be cockeyed optimists. The vast majority of them continue to believe that the American Dream is still achievable, but most of them don’t have a written financial plan to make sure it comes true.
Not that there’s anything wrong with optimism. After all, it’s a prerequisite for economic growth and just might be Americans’ greatest competitive advantage.
But it takes more than optimism on the part of investors to ensure they have all that they want in retirement.
This conflict was revealed in a recent survey conducted by Wells Fargo (WFC) and Gallup. According the survey, U.S. investor confidence is at a seven-year high, as measured by their Investor and Retirement Optimism Index.
As part of those results, 84% of those surveyed said “[they] are as confident today as they were a year ago that the American Dream remains achievable for them.” As for defining the American Dream, almost everyone surveyed agreed that it includes living comfortably in retirement, owning their own home and having meaningful employment.
Having the world be a better place to live and enjoying a higher standard of living than their parents are also very important to U.S. investors, the WFC/Gallup survey said.
American Dream vs. American Reality
Those sound like wonderful aspirations. Too bad too many investors have no real plan to get there. On the plus side, 69% of non-retired investors have a specific financial plan to reach their retirement and investment goals, the survey said.
The disappointing part is that only 36% of non-retired investors have any kind of written plan to achieve the American Dream.
It’s good to know that belief in the American Dream is alive and well. The opposite — cynicism or defeatism — isn’t a very appealing alternative. But having little less than two-thirds of investors without a written plan? That’s almost certainly not going to cut it.
U.S. investors are pretty clear about what they want, but they’re not doing nearly enough to get there. The implications, of course, are frightening.
Nearly 40 million working-age households have no retirement account assets, as in a 401(k) or IRA, according to the National Institute on Retirement Security, a non-profit research and education organization.
The news only deteriorates from there. The average working household has virtually no retirement savings, the NIRS says. Indeed, when all U.S. households are included — that is, both households with and without retirement accounts — the median account balance is $2,500 for all working-age households and $14,500 for near-retirement households.
There’s more bad news, still, but it’s important to remember that this isn’t entirely the fault of average Americans.
Like so much else in American life these days, ownership of retirement account assets is very much a tale of haves and have-nots. Furthermore, only 55% of private sector workers have access to a retirement plan at work.
The Baby Boomers are just starting to retire, but this promises to be a very expensive problem for all Americans. They’re not just going to roll over and die because they don’t have retirement assets.
Some big changes in public policy could help remedy this impending disasters, but don’t bet on that happening anytime soon.
Let’s face it: You’re on your own. If you want to achieve the American Dream, you’re on your own. It’s time for most folks to put pencil to paper.
