Retirement Planning Without Becoming a Lottery Winner
Updated: May 20, 2019
Shedding light on a recent study with controversial results.
Have you heard of the micro-investing app, Stash? Stash is part of the new fintech movement that allows consumers to tie their purchases to investments. Similar apps would include Acorns, Robinhood, Vault, etc.
The average age of a Stash user is 29 and the average income is less than $50,000 per year. Tying in transactions made using Stash’s banking service — by way of reward points that are being picked up incidentally — makes it even more seamless for consumers to take some of their money and invest it, while at the same time demystifying the process.
Stash ran a survey
In light of Financial Literacy Month, Stash recently produced a consumer survey that highlighted new data concerning the retirement and investment habits of U.S. citizens. The results proved interesting and controversial.
Men are more frugal than women, especially when it comes to Millennials.
They also looked at generational data
The new survey also suggests considerable generational differences when it comes to saving. Retirement planning is a major financial decision for most people to grapple with and it presents many challenges when people are low on cash flow.
The spotlight from the data review is that Millennial women (29 percent) are more than twice as likely as Millennial men (12 percent) to have debt and be unable to save. The study also found that if they won the lottery, men (at 61 percent) would be more likely to save or invest the entire amount than women (at 42 percent).
Planning on winning the lottery?
Ask yourself – are you expecting to win the lottery so that you can afford to retire someday? In the survey, 18 percent of the US adult population answered yes, they are basing their retirement plans on the expectation of lottery success. That is a dangerously risky financial decision given the extremely low odds. This expectation was found in a higher proportion of Millennials at 26 percent, compared with 13 percent of the Baby Boomers, followed by Generation X at 19 percent.
Millennial men in particular (66 percent) feel the lottery is a reasonable retirement plan, compared to Millennial women (58 percent). Although men are more inclined to invest any winnings than women, as opposed to going on a spending spree.
The study also found that Millennial women (31 percent) are almost three times as likely as men (13 percent) to have no retirement plan of any kind. Moreover, when it comes to investing, Millennial men are also doing marginally better than women.
For men, 62 percent manage to invest between 5 and 15 percent of their income. In contrast, 52 percent of Millennial women were found to be investing less than 5 percent of their income into pensions and other investment tools designed to meet their retirement plans.
For some people, complete retirement is not a realistic option. This is indicated by the finding that more than a fifth (22 percent) of U.S. citizens plan to spend their retirement working a part-time job.
What’s the solution?
A lack of know-how may what’s keeping Americans from investing in retirement. Nearly half (48 percent) would start building retirement nest eggs if only they had more knowledge about how and where to invest. 35 percent said access to free, high-quality advice would be an incentive for them to invest, while 29 percent avoid investing because they lack expertise and find the whole process overwhelming.
Other ways of coping financially include a minority of respondents stating they will expatriate to find cheaper living abroad (4 percent of people). Others have indicated they would be happy to depend on their children (4 percent) or try to find a rich spouse to support them (3 percent of people).