SUNNYVALE, Calif.--(BUSINESS WIRE)--Sep. 7, 2017--
Nearly half of Americans feel more financially secure today compared to
five years ago, but this security can mask blind spots that could
undermine their long-term financial health, according to a new survey
from Financial Engines (NASDAQ: FNGN), America’s largest independent
investment advisor.1 The survey found that nearly half (47.3
percent) of Americans said they felt “somewhat or much more secure”
about their finances compared to five years ago. However, just eight
percent of those respondents – and six percent of those Americans
surveyed overall – were able to pass a quiz about a broad range of
financial decisions they most likely will need to make during their
“It’s not surprising that Americans are feeling better about their
financial situations given low unemployment and a record-breaking stock
market,” said Andy Smith, a Certified Financial Planner with Financial
Engines. “But as our quiz shows, there’s a persistent problem with
financial literacy in this country. When it comes to your finances, poor
decisions you make today can cost you for the rest of your life.”
Americans Need Help with Long-Term Planning
People who took the quiz struggled most with questions pertaining to
long-term financial wellbeing, such as claiming Social Security
benefits, making arrangements for healthcare in retirement and
purchasing the appropriate amount of life insurance.
Most Americans recognized the complexity of claiming Social Security
benefits. Only one-fifth (21.6 percent) of those surveyed said they felt
confident about it. That was borne out in the quiz – nearly two-thirds
of people (64.9 percent) did not know they could defer claiming Social
Security benefits until age 70, earning between six and eight percent in
additional lifetime benefits under current conditions for each year they
delay between ages 62 and 70. A previous study
by Financial Engines found that claiming Social Security benefits too
early can result in individuals leaving as much as $100,000 in potential
earned benefits on the table. Married couples can miss out on as much as
$200,000 in lifetime benefits.
Most respondents also greatly underestimated how much they will need to
cover out-of-pocket healthcare costs throughout retirement. More than
half (58 percent) of those 65 and over – and three-quarters (76 percent)
of those ages 55 to 64 -- believed the typical married couple retiring
today at age 65 will need between $50,000 and $200,000. This is well
under the estimated
average cost of $266,000.
While no one knows exactly how long they will live, many people
underestimate standard assumptions for life expectancy, which can lead
them to save much less than they need. Nearly three out of four people
(72 percent) were unaware that the typical 65-year old man can expect to
live about another 20 years, on average, with 61 percent underestimating
longevity by at least five years. The Social Security Administration estimates
that a man age 65 today can expect to live, on average, until the age of
84.3 years old. A typical woman age 65 today can expect to live, on
average, until age 86.6.
Additionally, more than half (51.4 percent) of people significantly
underestimated how much life insurance they should have – 10 times their
annual income. This discrepancy could lead to many Americans being
significantly underinsured, which could have serious implications for
their loved ones.
“Often, people don’t have a realistic idea of their cost of living or
how expensive things will be in retirement,” said Smith. “While each
person has a unique financial situation, it’s important to remember that
you are not alone. Take advantage of helpful online planning tools and
if you want more personalized help, reach out to a financial
professional you trust – someone who can help clarify complex issues and
guide you through the financial planning process.”
He added, “Whether you’re just starting out or already have complex
finances, working with a professional to map out a plan for achieving
your goals can make you feel more confident and secure about your
future. In fact, more and more employers are recognizing this and
offering financial planning resources as a benefit to their employees,
often at a significantly discounted rate and without the asset minimums
that many financial advisors require.”
Financial Engines quiz (www.financialengines.com/quiz)
to test your own financial knowledge.
to find a financial
advisor in your area who will help you find personalized solutions
to your financial questions.
Financial Engines surveyed 1,000 individuals between the ages of 18 and
65 who are employed full-time, part-time or self-employed. The survey
and panel were both fielded using the Survata Publisher Network.
Fielding was executed in July 2017.
About Financial Engines
Financial Engines is America’s largest independent investment advisor.
We help people achieve greater financial clarity by providing
comprehensive financial planning and professional investment management
and advice. Headquartered in Sunnyvale, CA, Financial Engines was
co-founded in 1996 by Nobel Prize-winning economist William F. Sharpe.
We currently offer financial help to more than 9 million people across
over 700 companies (including 146 of the Fortune 500). Our unique
approach, combined with powerful online services, dedicated advisors and
personal attention, promotes greater financial wellness and helps more
Americans to meet their financial goals.
For more information, please visit www.financialengines.com.
All advisory services provided by Financial Engines Advisors L.L.C.
Financial Engines does not guarantee future results.
This press release contains forward-looking statements, including
statements regarding the use of professional investment and financial
planning help, which involve risks and uncertainties that could cause
actual results to differ materially. These risks and uncertainties are
outlined in our SEC filings. You are cautioned not to unduly rely on
these forward-looking statements, which speak only as of the date of
this press release. Unless required by law, Financial Engines undertakes
no obligation to publicly revise any forward-looking statement to
reflect circumstances or events after the date of this press release or
to report the occurrence of unanticipated events.
1 For independence methodology and ranking, see
InvestmentNews Center (http://data.investmentnews.com/ria/).
View source version on businesswire.com: http://www.businesswire.com/news/home/20170907005539/en/
Source: Financial Engines
Mike Jurs, 408-498-6590
Gardell Kreuter, 646-428-0618