SEATTLE, March 11, 2015 /PRNewswire/ -- Despite ongoing concerns about the future of our country's Social Security program, more than half of Americans (including 40 percent of millennials) are planning to fund at least a portion of their retirement with Social Security benefits, according to Capital One ShareBuilder's Financial Freedom Survey, a national study measuring current sentiment and behaviors related to investing and retirement, and tracking America's progress on the path to financial freedom. The study found that social security is the most popular source for funding retirement, ahead of 401(k)s, pensions and investment portfolios. Additionally, despite a majority of non-retired Americans saying retirement investing is a top priority, many are not currently investing at all.
"This year's Financial Freedom study indicates a continued gap between Americans' actions and the tried-and-true investing principles that they know are important -- and it signals a need for better tools, education, and transparency in our industry," said Garrett Silver, head of retail brokerage products at Capital One ShareBuilder. "Unfortunately, more than ever the onus is on the individual investor – not Social Security, our employers, or anyone else – to ensure a financially stable retirement."
The survey uncovered the following key themes related to retirement and investing:
- Americans know it's important, but aren't taking action. Nearly all respondents (91 percent) believe they should be saving something, but only 76 percent are currently setting aside any funds for retirement, and only 24 percent are saving more than 10 percent.
- Distrust of the markets is a key issue. A majority (58 percent) of investors indicated that distrust of the markets and/or financial services industry is negatively impacting their confidence about investing. Lack of knowledge, experience and transparency, as well as investing complexity are also popular impediments.
- Many Americans aren't having the talk. Just over a quarter (27 percent) of non-retired Americans who have a spouse or significant other say they never discuss retirement planning with their spouse. Meanwhile, more Americans are comfortable talking about religion (52 percent) and sex (43 percent) as they are about money (42 percent).
- Transparency and education may be the key. Nearly three-quarters (74 percent) of respondents said product and pricing transparency would be helpful for understanding their investment options. Meanwhile, 84 percent of respondents said improving their knowledge about investing is important, yet only 66 percent said they spend any time doing just that.
- Advice is important, too. Thirty-six percent of Americans say financial advisors are their most trusted source for financial advice. Older Americans and women are the most likely to turn to an advisor, while men are more likely to trust themselves or look to financial media to make investing decisions.
- Many Americans say they're willing to make sacrifices for a better future. Eighty-six percent of pre-retirees say they'd be willing to sacrifice something now for a more comfortable retirement later. Most respondents say they'd forego certain luxuries and higher-income Americans more likely to put more of an emphasis on saving for retirement.
Americans Leveraging a Mix of Resources to Fund Retirement
While Social Security remains one of the top resources Americans cite as how they plan to fund their retirements, many seem to be taking initiative to plan for their futures through other retirement savings vehicles. Nearly half (48 percent) selected 401(k) plans as a one of their resources of funding and 21 percent said an IRA will help support them in retirement.
Americans also plan to leverage pension plans (32 percent), investment portfolios (23 percent) and real estate (22 percent) to help fund their retirement.
Lack of Confidence is Impacting Long-Term Savings
The survey found that Americans recognize the importance of financial literacy and would like to learn more about the markets, however many lack confidence and the financial knowledge they need to invest wisely.
More than half (55 percent) of investors indicate their lack of knowledge and experience in investing hinders them from feeling confident about investing; however, 84 percent acknowledge that improving their financial literacy and ability to navigate the markets is important for the future.
- One in five (23 percent) investors don't trust themselves to make trading or other decisions related to their accounts
- Four-in-five (81 percent) Americans believe they should be spending time to improve their knowledge, but only two-thirds (66 percent) actually do so
- 61 percent would like financial tools that offer step-by-step guidance
Financial Resources and Advice are Crucial to Building Many Investors' Confidence
While technology, tools and resources are readily available to help investors build financial literacy and take ownership of their investing strategies, the study found that many Americans remain hesitant in making their own investing decisions and therefore seek professional advice.
- Sixty-one percent of women are more likely to use a financial advisor as compared to 51 percent of men
- Almost twice the number of respondents (41 percent) utilize a financial advisor for retirement planning versus self-directed investors solely making decisions through an online brokerage (23 percent).
Americans are Willing to Make Sacrifices for a Better Retirement
Americans who are not retired understand they need to make sacrifices now for a better retirement later, with 86 percent saying that would be willing to sacrifice something to ensure they could have a more comfortable retirement.
- Pre-retirees say they'd be willing to give up simple luxuries, such as weekly dinners (56 percent), daily lattes (54 percent) or having the most cutting-edge technology (54 percent).
- Three in five (61 percent) would be willing to sacrifice getting a new car every three years.
"Though most Americans claim to understand the importance of saving and investing for the future and recognize some of the actions they need to take, there are many factors that continue to hold people back and that must be addressed if we want to avoid a retirement crisis down the line," continued Silver. "Just as we take time to plan vacations and shop for new technologies or gifts, we must plan for our financial futures. At ShareBuilder, our goal is to simplify the process and empower Americans with the right tools and education – so they can make a plan, stick to it, and work to save for a more comfortable retirement."
The study was conducted using two probability samples: randomly selected landline telephone numbers and randomly selected mobile (cell) telephone numbers on January 8-11, 2015. The combined sample consists of 1,023 adults (18 years old and older) living in the continental United States. Of the 1,023 interviews, 521 were from the landline sample and 502 from the cell phone sample. The margin of error for the sample of 1,023 is +/- 3.06 at the 95 percent confidence level. Smaller subgroups will have larger error margins. Surveys are collected by trained and supervised US based interviewers using ORC International's computer assisted telephone interviewing (CATI) system. Final data is adjusted to consider the two sample frames and then weighted by age, gender, region, race/ethnicity and education to be proportionally representative of the US adult population.
About Capital One ShareBuilder
Capital One ShareBuilder is an online investing website for self-directed investors. Whether you're a seasoned investor or just getting started, ShareBuilder's goal is to offer investing tools and products with the goal to help plan your financial future without sacrificing your life to the stock market. No minimum required when you open an account, and pay low commissions when investing. Trade what you want, when you want, and any amount you want — stocks, exchange-traded funds, mutual funds, or options – or plan for your retirement with our simple and easy-to-use retirement solutions.
Securities are offered by Capital One Investing, LLC, a registered broker-dealer and Member FINRA/SIPC. Advisory services are provided by Capital One Advisors, LLC, an SEC registered investment advisor. Insurance products are offered through Capital One Agency LLC. All are subsidiaries of Capital One Financial Corporation.
ShareBuilder and Capital One ShareBuilder are marketing names for Capital One Investing, LLC. ShareBuilder 401k and ShareBuilder Advisors are the marketing names for Capital One Advisors, LLC.
Securities and services are: Not FDIC insured • Not bank guaranteed • May lose value • Not a deposit • Not Insured by any Federal Government Agency
SOURCE Capital One ShareBuilder