THE FOUR PILLARS OF THE NEW
RETIREMENT: TRACKING UPDATE
WITH A SPOTLIGHT ON FAMILY
In 2019, Edward Jones first partnered with Age Wave on a landmark study, The Four Pillars of the New Retirement. We introduced a new, comprehensive framework to help people live well to and through retirement by considering both the challenges and opportunities within four massively important, interconnected pillars: health, family, purpose and finances.
Then, to further track the pulse of American sentiments during the life-changing pandemic, we conducted a series of surveys from May 2020 to August 2021. Below is a summary of the findings from our August 2021 tracking survey, which provides an update on how the pandemic has impacted our lives across the board, and around retirement specifically. What began as a tracking study became so much more, with our findings also shining a spotlight on the growing importance and complexities of family in retirement.
Tracking Update: Taking the Pulse on the Four Pillars
Despite the tremendous toll of the pandemic, there are signs of recovery and resilience across each of the four pillars. Negative impacts reported by Americans of all ages to health, family, purpose and finances were on the decline, while positive impacts—silver linings—were on the rise.
Throughout the pandemic, Gen Z has struggled the most of all generations with mental health declines, while Silent Gen suffered the least. The good news is, far fewer Gen Z respondents reported negative mental health impacts in August 2021 than in December 2020.
A major theme in our tracking studies has been the increasing strength of family ties during the pandemic, despite the social distancing and travel barriers caused by COVID-19. Seven in ten Americans say the pandemic actually brought their family closer together, and over half say that family relationships are now even more important.
Americans are also thinking about their lives more purposefully than before the pandemic, with 77% saying that it has caused them to refocus on what’s really important in life. In addition to family, most Americans say they are placing greater importance on the role physical, mental and financial health plays in their lives.
The pandemic has had a significant impact on retirement savings and planning, both positive and negative. On one hand, it boosted retirement savings for the 59 million Americans who began contributing more to their retirement savings during the pandemic. On the other, it derailed retirement savings for 50 million Americans who stopped or reduced contributions, and even more so for the 38 million who withdrew money from retirement savings.
For many Americans the pandemic was a financial wake-up call; 69% of Americans planning to retire say it motivated them to think more about the financial aspects of their retirement planning, and 63% say it caused them to think more about the non-financial aspects. The pandemic also catalyzed 22 million Americans to begin working with a financial advisor for the first time.
Families Matter and Family Matters
The Changing Family
The dynamics and definition of family are morphing in the 21st century to become more diverse, multi-generational and blended. We’re also seeing rising numbers of Solo Agers, with 54 million Americans age 50+ who are unmarried. Family, however, remains a critical pillar of a successful retirement, despite the changing structure and more open definition of what constitutes family.
Women’s Retirement Complexities
Women will play an increasingly important role in shaping the demand of financial services over the years to come. They have grown significantly more financially powerful in their own right over the past several decades, and older women are about to become the sole controllers of $30 trillion of financial assets over the next decade as most wives outlive their spouses. Much of that money is set to be in motion, as an estimated 70% of widows switch financial advisors within a year after their husband’s death.
Planning for Health Uncertainties in Later Life
The greatest financial worry in retirement is healthcare costs, especially those of long-term care, but there’s an intention/action gap. Despite their concern, half of Americans 50+ have no plans in place for how they would fund long-term care. There’s an enormous opportunity for financial services professionals to help Americans better prepare, as 77% of pre-retirees and 59% of retirees would like guidance on healthcare and long-term care planning in retirement.
Leaving a Legacy
The pandemic sparked 66% of Americans to think about the legacy they want to leave behind and prompted 45.5 million Americans to discuss their end-of-life plans and preferences with family members for their first time. Overall, older adults say that memories are twice as meaningful as money when it comes to the legacy they want to leave. Yet most would still like to leave a financial legacy to their families, and almost half now prefer giving while living.
Navigating Family Finances
A majority of Americans (63%) understand that it can be very beneficial to involve different generations in important financial decisions, but for many, it’s a difficult conversation to start. Commonly sited barriers to having such conversations include wanting to avoid conflict, discomfort and burdening families. The importance of having such conversations is paramount: 42% of Americans and 53% of Millennials with living parents/in-laws worry that their parents/in-laws will become financially dependent on them.
Our recent tracking survey uncovered another common and potentially challenging intention/action gap. Americans age 50+ say having a will is the most important financial action to take for their families in advance of their death, yet only half actually have one. A vast majority (81%) do not have the three most essential end-of-life documents: a will, healthcare directive/living will, and a designated power of attorney. All adults, and especially older ones, have an opportunity to remove a large amount of potential burden placed on their families in the wake of their death by doing a better job preparing for their end of life.
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