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Chase study shows we're not preparing well for retirement

by Jim Sloan

Yet another financial services company has come out with a report showing that consumers aren't giving them enough money via a 401(k) retirement savings account.

JPMorgan Chase, which provides retirement plan services in the U.S., added its name to the long list of retirement planners conducting surveys showing our savings rates are not high enough to ensure a comfortable retirement.

Savings accounts for emergencies

Companies like JPMorgan use the studies to scare the pants off baby boomers, who readily admit that they aren't saving enough for their retirements. In the case of the JPMorgan study, survey respondents said they are using their money to pay down debt, build up money market accounts or a high interest savings account for a rainy day, and pay their mortgages.

JPMorgan's retirement plan unit doesn't like the sound of that--not one bit. While the mortgage division might be happy to hear that some consumers are trying to stay out of foreclosure, Chase's retirement guys used the survey results to assert their contention that retirement saving is more important than any of that other stuff.

Here are some of the survey findings:

  • Two-thirds of us have no idea how much we should save for retirement, even though we're scared silly we won't save enough.
  • One in five of us have no idea how much money we'll have in our retirement savings accounts, investments and certificates of deposit when we stop working.
  • 80 percent of us are willing to put our investments and savings accounts into a retirement product that returns a guaranteed monthly income. That's the good news for JPMorgan, which happens to sell that kind of thing. The bad news is that 70 percent of us wouldn't want to pay the standard 4 percent commission.

Retirement savings accounts important

The Chase study took heart in hearing that nearly 90 percent of us think our 401(k) savings accounts are extremely or very important. We're taking responsibility for our futures, that's good. Unfortunately, we've chosen to pay down our debt instead of increasing our investments in 401(k)s, Chase noted, and that's bad. What's more, about three-quarters of us aren't reading all that investment material outfits like Chase send to us. That's really bad!

When asked how we would spend a $5,000 windfall, putting the money into a retirement savings account ranked fourth behind paying off credit cards, adding to the emergency fund and paying monthly bills.

Chase conducted the survey of more than 1,000 people in July 2010 and found that, at that time, only 17 percent said retirement was their first priority last year. That's down from 27 percent in 2009 and 44 percent in 2007.

Mixed messages

In many ways, the Chase survey contradicts a recent Gallup Poll which found that retirement savings are the top-rated concern Americans--higher than more immediate concerns such as paying for a child's college, making a minimum credit card payment or coming up with the money to pay monthly bills or a mortgage.

The discrepancy could be explained this way: We are worried about retirement savings accounts and investments, but the economy has made us powerless to do anything about it. A Wells Fargo poll found recently that U.S. workers are increasingly pessimistic about their investments and retirement savings accounts as energy prices, unemployment, groceries and federal budget deficits continue to climb. Many of us saw our 401(k) balances decimated during the recession, so instead we are focusing on things we can control--debt, spending and keeping a roof over our heads.


Disclaimer:This content is not provided or commissioned by American Express. Opinions expressed here are author's alone, not those of American Express, and have not been reviewed, approved or otherwise endorsed by American Express. This site may be compensated through American Express Affiliate Program.

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