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New study: Planners have the edge in retirement saving

With the latest Wells Fargo/Gallup Investor and Retirement Optimism Index at a 16-year-high, a Wells Fargo leader underscores a key finding from that research: planning matters

March 23, 2017
John Papadopulos
John Papadopulos

John Papadopulos is head of Wells Fargo Retirement, overseeing the company’s 401(k), institutional retirement, and trust operations businesses.

Wouldn’t it be nice to enter retirement feeling confident about the ability to maintain your current lifestyle? It’s possible. According to the latest Wells Fargo/Gallup Investor and Retirement Optimism Index, 78 percent of survey respondents said they were confident — including 31 percent highly confident — that they could do it. And, with the overall Index coming in at +126, this is the most optimistic retirees and those saving for retirement have been in 16 years.

The big question is, what are these individuals doing that makes them so confident in their ability to financially reach and enjoy retirement?

The answer: many have a written plan. While 43 percent of investors with a written plan for retirement said they’re “highly confident” they’ll have enough income to maintain their lifestyle, only 23 percent of investors without one felt the same way. This stark difference in confidence levels is the same regardless of income.

What does a blueprint for successful retirement look like? It can be developed with a financial advisor, found using an online tool, or even created from scratch. Having the plan is what matters.

Why ‘when’ matters

Determining when to stop working is a key part of any retirement plan. It can have a big impact on your monthly income, since the longer you wait to plan, the less time you’ll have to adjust your savings strategy. Yet, the index report shows that just four in 10 investors age 50 or older have given that key life moment much thought, and 52 percent of those already retired wish they had started planning sooner.

So how do you pick that perfect age and year? How do you decide how long you’ll need your money to last? A quick way to start is with an online retirement calculator, which allows you to modify age and other factors to see the impact of retiring at various times. The Social Security Administration website provides a quick and easy way to estimate monthly Social Security benefits based on different retirement age scenarios.

For illustrative purposes only, consider the differences in monthly income based on three different retirement ages (see assumptions below*):

  • Retires at age 62: $6,796
  • Retires at age 65: $9,171
  • Retires at age 67: $11,242

Deciding when to retire is an important and difficult process, and there are many resources to help determine when the time is right. Non-retired investors were polled to see how many of them had utilized each of the following options:

  • 63 percent discussed the decision with friends and family.
  • 59 percent estimated their retirement income using different retirement age scenarios.
  • 51 percent manually crunched the numbers.
  • 50 percent used online tools to estimate their retirement income.
  • 47 percent talked with a professional financial advisor.
  • 44 percent read up on retirement-age considerations in financial publications.
  • 30 percent reviewed their options for retirement age on the Social Security Administration website.

Sometimes the choice of when to retire is impacted by external factors. Sudden life events can change realities overnight. And, as people live longer, working longer is something many decide they want to do.

Regardless of the circumstances surrounding retirement, it is important to do the math and have a plan.


*Calculations in the retirement income examples were performed by Wells Fargo Institutional Retirement and Trust. Estimate is based on a beginning salary of $35,000, with a 5% initial deferral rate beginning at age 25 with a 1% annual increase (up to a 13% deferral rate), a 7% annual return on investments prior to retirement, and a 2% annual salary increase. Taxes and fees have not been calculated in the illustration. Estimates factor in Social Security payments, but do not include employer matching contributions. The calculations made are not guaranteed, and are not projections of actual results. The retirement savings amount assumes that the annual contributions and payroll deduction will continue each year until retirement. A regular investment program neither provides assurance of making a profit nor guarantees against loss in a declining market. The calculations do not guarantee results under any savings or investing program, and cannot guarantee that you will meet your retirement savings goal. For more detailed information that takes into account your individual situation, please consult your tax, legal, or financial advisor.

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