Recently, I heard that people with a financial plan are 2.5x more likely to have a successful retirement. What?! I did a quick Google search to validate this statistic. It is indeed true; I found several more unbelievable statistics recently highlighted by Savology, a financial planning platform, that shed light on the essential nature of financial wellness and preparedness in our lives.
The key takeaways underline many Americans' fiscal health—or lack thereof.
1. A Shaky Safety Net
34% of Americans have zero savings, making them financially vulnerable to unforeseen circumstances or emergencies. 45% of Americans report needing help to cover an unplanned expense of as little as $400. When was the last time an emergency cost you $400? Considering today's inflation rates, the dollar value of common emergencies is likely much higher. My husband and I recently took our 2010 Honda Civic in for its usual servicing and ended up with a service bill way beyond our expectations (way more than $400)! You cannot predict when your trustworthy Civic will require extra TLC.
2. The Weight of Debt
Student loans continue to be a burden, with 1 out of 4 American adults still repaying their student debts. The good news is that the average federal student loan debt is $37,338 per borrower. This is lower than what I was anticipating. The not-so-good news is that 20 years after entering school, half of the student borrowers still owe $20,000 each on outstanding loan balances. Since these repayments can significantly impact one's ability to save, invest, and plan for the future, tackling this debt with a sense of urgency is imperative.
3. Retirement Anxiety
Shocking yet true—nearly half of Americans (42%) have less than $10,000 saved for retirement. Everyone's retirement needs are different. Earlier this year, Bloomberg wrote an article stating that most investors will need approximately $3 million saved for retirement. With pensions no longer an element of employee benefits, this number solely depends on YOU to build it. The sooner you start putting money away, the better off you will be and the greater your likelihood of retiring on your terms.
4. A Lack of Financial Literacy
Even though money rules the world and is the most widely accepted form of exchange for goods, only 16% of Americans claim they were taught how to manage their finances. Schools are finally introducing financial literacy into their curriculum; we are beginning to see it in middle school classrooms! The sooner we teach young minds about saving money, the better off our society will be.
5. The Need for a Robust Plan
A financial plan is pivotal, yet 72% of Americans lack a comprehensive one. The absence of a structured, strategic plan exposes you to avoidable fiscal risks, making you unprepared for future needs. Consider any time you entered a situation without a plan. Yes, sometimes it goes well, and trust me, I love spontaneity. But when it comes to your financial future, building the foundation of a plan affords you the luxury of spontaneity without derailing your trajectory.
While this data is shocking, do not let it demoralize you. Instead, let it spur you into action. Facing the hard facts about our financial readiness can be challenging but essential. Tomorrow depends on our financial decisions today. That's why individuals and families with a financial plan end up with 2.5x the wealth of someone without a plan — it's a guide to pursuing what you want in life, reducing money worries, and ensuring your desired future.
Financial stability starts with you and your next decision. Whether it is choosing to manage debts, plan for retirement, or create a complete financial strategy, there is no better time than the present to prioritize your financial future. A financial planner (like me!) can guide you toward a future free of financial anxiety overshadowing your goals; it’s time to set a clear financial path tailored to your objectives and needs.
Our company, KWB Wealth, has guided and is still guiding hundreds of families and individuals on this transformative journey. Reach out to us, and let's build your pathway to financial serenity and prosperity together.
~ Rachel Bubb