Planning for retirement
is tougher and more complicated for middleaged Americans who are single or married
with children from previous relationships than it is for those with “traditional”
families. According to the MetLife Mature Market Institute’s Family Matters
study, 40 to 65- year-olds with non-traditional families face more challenges
with regard to saving and investing and are less likely than others to have
a distinct retirement vision. They are more unlikely to have specific income
vehicles, such as 401(k)’s, pension plans and annuities.
The study determined that
family structure largely influences how people plan for retirement. It addressed
three specific mid-life segments: “Traditional Families” (two parents
with children from their current relationship), “Blended Families”
(two parents with at least one child from a previous relationship) and “Single
Women” (widowed, divorced or never-married with or without children).
“There has been a
great deal of attention paid to the role gender plays in retirement planning,
but family structure is also critical and often overlooked. This research shows
that retirement planning for people in midlife is strongly influenced by family
dynamics. We should not be ignoring how former spouses, stepchildren and having
no children influence savings and income for retirement as well as estate planning,”
notes Sandra Timmermann, director of the MetLife Mature Market Institute.
“Today’s middle-aged
Americans are seeking ways to make their income last a lifetime and tools to
support their goals. They are looking for professional planning and financial
products for “families like theirs,” not just generic advice,”
Timmermann added.
Among the survey’s
major findings:
Blended Families and Single Women Report a Significant Disadvantage in Retirement
Planning
• Nearly seven out of ten (66%) Traditional Families feel at least somewhat
prepared for retirement, compared with 56% of Blended Families and only 40%
of Single Women. A majority of Traditional Families (55%) have a clear idea
of what they hope to experience when they retire, compared with only 38% of
Single Women and 48% of Blended Families.
• Nearly two-thirds
(62%) of Single Women and Blended Families (61%) say it’s significantly
more difficult for them to save for retirement.
• Only 29% of Blended Families and 21% of Single Women consistently contribute
to their retirement accounts, compared to 41% of Traditional Families.
• Single Women and Blended Families are more likely than their peers to
say they know they should be saving more, but don’t know where to start
– or that other expenses get in the way.
• Fewer than half (42%) of Single Women own 401(k)’s, compared with
58% of Blended Families and 70% of Traditional Families. (As one single woman
noted, many single women with children work part time and there are few employers
who set up 401(k)’s for part time workers.) Forty-four percent of Traditional
Families have pension plans and 17% have annuities, while Blended Families have
41% and 15%, respectively; Single Woman have 26% and 11%.
• Roughly one in five Blended Families and Single Women (19% and 18%,
respectively) are concerned that they don’t have safeguards to ensure
that an ex-spouse will not lay claim to their income or savings meant for themselves
or their children.
Single Women Report Specific
Challenges
• Single Women say they lack the safety net of a second income that their
married peers have. “Because I am a widow, I do not have the buffer of
a second income” is a sentiment shared by many single female respondents.
They are, therefore, more worried (38% vs. 27% of Blended Families and 23% of
Traditional Families) that they will not have a set level of monthly income
to last through their retirement.
• Among survey respondents who are working, Single Women are more likely
than their married counterparts to be working only part-time. While roughly
half (55%) of the entire group report full-time employment, Single Women make
up the greatest share of those working part-time (26%) with the rest split evenly
between Blended Families (12%) and Traditional Families (12%).
• Two-thirds (65%) of Single Women say they do not have a good idea of
how much annual income they will need to fund the their retirement, compared
with roughly half of their Traditional and Blended Family counterparts (48%
and 54%, respectively).
• 25% of Single Women do not own retirement savings/investment vehicles,
almost twice that of Blended Families (13%) and three times that of Traditional
Families (8%).
Some Concerns Transcend
Family Structure
Healthcare is a critical issue for all in the survey group. Roughly two-thirds
(63%) of Traditional Families do not expect to have enough money to cover healthcare
costs in retirement, as is the case with 69% of Single Women and 66% of Blended
Families.
Of the entire group surveyed, almost half (47%) identify a need for more savings
and assets; 29% would like a better gauge of both their routine and unpredictable
retirement expenses.
“Retirement income
and healthcare costs are universal concerns,” notes Timmermann. “The
challenge for those in middle age is to make the unpredictable elements in their
lives – the current and future needs of their children, the assets or
income that go to an ex-spouse, their own healthcare and other costs –
more manageable.
More security with regard
to income and assets would be of great help to them as they transition into
retirement.”
401(k) Plans are
seen as Primary Source of Income over Social Security
Defined contribution plans, such as 401k’s and 403b’s, ranked first
as the vehicle likely to be the primary source of retirement income. One father
in a Blended Family said, “We try to save and I do have a 401k through
my employer. However with Social Security in its current state I can only hope
that I can put enough into my 401k to supplement what the government will pay
out.” Social Security ranked second in this area.
Help Wanted for
‘Families Like Mine’
A significant portion of all families report a desire for financial advice tailored
to their specific needs. The majority of Single Women (51%) long for retirement
advice and tools designed for them. Forty-five percent of Traditional Families
and 43% of Blended Families concur. As one Blended Family respondent noted,
“There is a lot to plan for…how long should I work, how much to save,
how much to help my children vs. help myself and my future so my children are
not taking care of me.”
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