Edward Jones Study Finds Americans Still Underutilizing Many Retirement Savings Options

Americans are not appropriately preparing for major threats to retirement income

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Feb 27, 2018, 09:00 ET

ST. LOUIS, Feb. 27, 2018 /PRNewswire/ -- According to a new study from financial services firm Edward Jones, more than half (51 percent) of Americans are not actively contributing to an employer-sponsored 401(k) retirement account. The survey looked at various savings options to better understand how Americas are preparing for retirement and found that even fewer people are saving through individual retirement accounts (IRAs) or health savings accounts (HSAs), 37 percent and 18 percent, respectively.

"While 401(k) participation has increased over the years, there continues to be opportunities for Americans to better utilize not only employer plans, but they may also be overlooking other popular retirement savings tools," said Scott Thoma, Principal and Investment Strategist for Edward Jones. "Individuals seem to understand the key risks they will face in retirement, so it is important to design a comprehensive strategy, considering all of these retirement savings vehicles, to ensure they can prepare for these risks."

When asked about the biggest threats to retirement income, Americans identified healthcare costs (37 percent), outliving their savings (22 percent) and inflation (15 percent) as top concerns. Additionally, more than half of Americans (51 percent) feel that healthcare will be their biggest expense in retirement.

Interestingly, the expectation that healthcare will be the greatest cost in retirement significantly increases with household income. Only 37 percent of households with an annual income of less than $35,000 indicated that healthcare would be their biggest expense in retirement, compared to households with annual income of $50,000 - 75,000 (55 percent) and households with an annual income of $100,000 or more (62 percent).

"It's no surprise that healthcare is a top concern for Americans preparing for retirement," said Thoma. "One resource that can help people plan for unexpected healthcare expenses, is a health savings account (HSAs). Qualifying individuals with high deductible health plans, can benefit as these tools offer tax-advantages to help save for various healthcare costs, and these accounts can be a very valuable source to pay for health care expenses in retirement."

When asked about the recent tax reform, 44 percent of Americans feel that the new plan will have an impact on their retirement savings strategy. Taking a closer look at generational sentiment, Edward Jones found that 51 percent of Millennials (or those 20-37 years-old) believe tax reform will impact retirement planning as opposed to 40 percent of Baby Boomers (those 54-72 years-old), indicating that those further from retirement are more optimistic and amenable to making changes to their savings strategy.

Methodology

This survey was conducted by ORC International's Telephone CARAVAN® Omnibus on behalf of Edward Jones. The survey was conducted among a nationally representative sample of 1017 respondents from February 1-4, 2018.

About Edward Jones

Edward Jones, a FORTUNE 500 firm, provides financial services for individual investors in the United States and, through its affiliate, in Canada. Every aspect of the firm's business, from the types of investment options offered to the location of branch offices, is designed to cater to individual investors in the communities in which they live and work. The firm's 16,000-plus financial advisors work directly with more than 7 million clients and care for $1 trillion in assets under management. Edward Jones is headquartered in St. Louis. The Edward Jones Web site is located at www.edwardjones.com, and its recruiting Web site is www.careers.edwardjones.com. Member SIPC.

SOURCE Edward Jones