Photo: Jade Berman / Flickr
by Elizabeth MacBrideThe extent to which the market’s volatility is contributing to the feeling of uncertainty was clear in a new survey released this week by Guardian, a life insurance company.
Some 39% of Americans are overwhelmed by the idea of how to save for retirement, based on the survey of 1,202 people, which also looked at how the different generations view saving, investing and retirement.
As you would expect, those closest to retirement are the most likely to be worried about having enough to retire. But Gen Y’ers also are worried and significantly confused about their finances in general.
A higher proportion of Gen Y’ers, 75%, said that in light of the last five years they are more likely to park their money in a savings account.
And 52% said they completely or somewhat agreed with the statement: “I feel so overwhelmed by the prospect of saving for retirement that I don’t know where to start.”
This is a disturbing finding, given how much benefit accrues to people who start investing early. The power of compounding mean your dollars are twice as powerful in your 20s as your 30s: If you invest $2,000 a month starting at age 20 to withdraw when you’re 60, and earn a conservative 4%, you end up with $1.4 million. If you wait until you are 30 to start, you’ll end up with $670,000.
Overall, 50% of the U.S. population, according to the survey, is worried they don’t have enough money saved for retirement. About 65% are more likely now than five years ago to consign their money to savings accounts in an effort to keep their finances stable. More than a quarter say they have stopped investing in the stock market because it feels like too much of a gamble.
Withdrawing from the market in times of uncertainty historically has been a big mistake, as we wrote in 7 Pitfalls for Market Timers.