Competing Priorities Impact Retirement Preparedness
Franklin Templeton’s 2020 US Retirement Income Strategies and Expectations survey revealed the importance of having a plan to help reduce financial-related stress—particularly relevant amid today’s uncertainties. Our Felix Touchard discusses some findings of the survey, and how respondents feel about their financial future.
The uncertainty and financial hardship related to COVID-19 has caused many individuals to reconsider their short- and long-term financial priorities. Individuals without adequate savings may not only need to curb everyday spending, but also delay their retirement or other long-term goals. The virus has put the spotlight on financial preparedness, and the importance of having a strategy to cope with unforeseen events or things generally beyond our control.
The Importance of Emergency Savings
Franklin Templeton’s 2020 US Retirement Income Strategies and Expectations (RISE) survey was conducted before the coronavirus triggered lockdowns across the world, but the survey’s findings are perhaps even more relevant today. Across all age groups surveyed, one’s ability to handle unforeseen expenses ranked as a top-three driver of moderate or significant stress.1
When asked to choose from a list of 14 specific areas one would like financial resources or tools to help support, the top three answers among the youngest groups were similar. For those aged 18-24, “manage my debt” (34%), “save for emergency expenses” (32%), and “create and manage a budget” (31%) were most cited. Among those aged 25-34, tops were “manage my debt” (29%) and “create and manage a budget” (25%), followed by “save for emergency expenses” (24%). “Manage my debt” and “save for emergency expenses” remained in the top three among the next two demographic groups, ages 35-44 and 45-54.
Meanwhile, when asked to choose from a list of seven different current financial goals or priorities, “having sufficient emergency savings to cover unexpected expenses” was cited more frequently than saving for a home or for retirement when looking across nearly all age groups surveyed. It’s clear many individuals need help balancing urgent needs, while still preparing for long-term goals such as retirement.