Surprising News About Finances of People Over 50
A Wells Fargo survey finds many are pretty darn happy
It may be that the media, including me, have been painting too dreary a picture of the finances of Americans over 50 — particularly compared with people who are younger.
That’s my reading of data buried within the new Financial Health in the U.S.: 2013 National Survey of Consumers from Wells Fargo. (The survey, conducted in mid-November by Wells Fargo, Market Probe and WBR Market Intelligence, interviewed 1,004 adults between age 25 and 75, all financial decision-makers for their households who had a minimum of $10,000 in household investable assets.)
“We do a lot of surveys, mostly focused on whether people are saving and are they saving enough. This was different — focusing on financial health, which can be a lot broader than the accumulation of money,” said Karen Wimbish, head of the retail retirement group at Wells Fargo.
(MORE: Welcome to Age 50: Top Money Tips)
The striking findings, to me, were that in nearly every case, respondents 50 and older were more chipper about their financial health than those under 50 — and people 60 to 75 were generally the cheeriest.
The 'Happy' Generation?
With due respect to Pharrell, maybe we should now start calling people 50+ the Happy generation.
Some notable stats:
- 58 percent of people 50+ say they are “financially happy,” but just 34 percent under 50 do. And 69 percent of those 60 to 75 are “financially happy.”
- 57 percent of people 50+ (and 66 percent of those 60 to 75) said their overall standard of living was in good or great shape; 49 percent of those under 50 said so.
- 59 percent of people 50 + said they were in good or great shape when it came to the amount of debt they had and more than two-thirds of those age 60 to 75 (67 percent) felt that way. By contrast, just 36 percent of those under 50 did.
- 73 percent of people 50+ have an emergency savings account; only 46 percent of those under 50 do.
- While 41 percent of people under 50 sometimes lose sleep worrying about money and finances, only 25 percent of those 50+ (and 16 percent of those 60 to 75) do.
- Half of people under 50 feel more stressed about their financial situation than they did last year, but just 29 percent of those 50+ felt that way.
- Just 44 percent of those 50+ are worried about their financial futures, while 56 percent of those under 50 are.
“This is a little different than what we’ve seen before,” said Wimbish. Americans 50 and older “don’t seem to be as panicked as we thought they would be.”
Wimbish said she wasn’t surprised that people under 50 are stressed, especially those in their 40s. “They’re thinking about sending their children through college,” she noted. But she, too, found it “interesting that the older generation was less stressed,” adding that Wells Fargo will likely probe that finding in future surveys.
Echoes of Other Surveys
In some ways, the Wells survey echoes two 2013 surveys.
When AARP dug into the Employee Benefit Research Institute’s 2013 Retirement Confidence Survey to focus on respondents 50 and older, it discovered that about 71 percent were confident they could come up with $2,000 if an unexpected need arose in the next month and just 13 percent described their level of debt as “a major problem.”
And in a Gallup survey last June, 75 percent of retirees said they were “financially comfortable,” compared with 67 percent of non-retirees. Gallup’s hypotheses: retirees have lower average expenses than non-retirees; few retirees are supporting young children and retirees are much more likely than non-retirees to own their own home outright, greatly reducing their housing costs.
(MORE: Avoid These 5 Money Pitfalls of Pre-Retirees)
What People Over 50 Aren't Happy About
But there was one key topic in the Wells Fargo survey where pre-retirees weren’t so happy: their future retirement.
Only 28 percent of people age 50 to 59 said they were in “good or great shape” to retire comfortably,” just a tad higher than the 24 percent under 50 who felt that way.
I asked Wimbish why she thinks people over 50 are, generally speaking, pretty happy with their financial status. “I think at some point they get reconciled” to it, she said.
3 Ways to Boost Savings After 50
Since this happens to America Saves Week (a campaign managed by the Consumer Federation of America and the Employee Benefit Research’s Institute’s American Savings Education Council) I can’t help but offer a reminder about three tax-sheltered ways people over 50 can save more for retirement than those under 50:
1. If you have a 401(k), 403(b), SARSEP or governmental 457(b) retirement plan, you’re allowed to invest up to $5,550 more than the standard $17,5000 annual limit this year.
2. You can contribute up to $1,000 more into a traditional IRA ($2,000 more for married couples filing jointly) than the standard $5,500 annual limit.
3. And if you fund a SIMPLE IRA or SIMPLE 401(k), you’re allowed to put in up to $2,500 more ($5,000 for married couples filing jointly) than the normal $12,000 limit.
The America Saves folks have also just launched the Assess Your Savings Plan tool, which you might want to check out. After answering 11 simple questions, you’ll learn how well you’re saving and steps you could take to save more — which could make you feel, in the words of Pharrell, “like happiness is the truth.”