Personal Finance

Americans Who Do This Have Saved Twice as Much for Retirement Than Those You Don't

John Seetoo

Published: November 6, 2024 11:49 am

Economic conditions for Americans over the last four years have been challenging, to say the least. Inflation, struggling small business and employment rates, higher taxes, and a litany of other problems have become major issues for the bulk of Americans. 

Northwestern Mutual conducts an annual survey, The Planning and Progress Study, that explores the attitudes, behaviors, and decisions made of Americans from the elderly and Boomer generations, all the way to Gen-Z. The 2024 study revealed some surprises, especially from Gen-Z. 

There was a consensus across the board from Americans in their 20s to their 80s on several issues. A majority held the following concurring concerns for 2024:

• Chances of Recession 
• Increase in Inflation
• A slowdown in household income
• Inflation blocking financial security
• Less discretionary spending power

The Advantages of a Financial Advisor

The most significant difference among respondents was between those who had hired a Financial Advisor versus those who did not.  Some of these behavior gaps included:

Gen-Z: Financially Smarter Than They Appear

Perhaps the most startling and unexpected statistics came from Gen-Z respondents. Although stereotypically perceived as frivolous, lazy, and spoiled, they demonstrate evidence of being more financially prescient than most of their elders. For example:

• Average age for seeking financial advice was 38, but for Gen-Z, it was 29. For Boomers, it was 49.
• Gen-Z had the strongest trust level for family member financial advice – 29%, vs. the 16% mean.

African-Americans Displayed the Widest Gains

While the overall majority of Americans statistically appear to benefit from a Financial Advisor, African Americans reportedly gained the most, among all other sub-categories.  

Takeaways and Suggestions

With all of the financial pressures faced by everyday Americans, The objective perspective of a Financial Advisor can prove to be invaluable. The caution that one seeking a Financial Advisor needs to bear in mind is for any potential conflicts of interest that may color the advisor’s guidance. If the strategy is to plan for an estate to grow safely and meet established goals to address specific contingencies, then some tips that come to mind from personal experience include:

• Avoid an advisor whose compensation comes from transactional commissions, which can encourage “churning” and unnecessary trade activity. An advisor whose firm charges a flat “wrap fee” annual percentage has a greater incentive to grow your account over the long haul.
• Include liquidity requirements into the equation early in the process so that any emergency funds can be easily disencumbered for rapid deployment. Some long term investments, depending on the type, may contain penalties for early withdrawal or liquidation, which will erode Return on Investment (ROI).   
• Make sure that the Financial Advisor is appraised of any changes in your financial condition ASAP, so that appropriate measures can be taken to address tax brackets, liquidity needs, ROI needs, etc.
• A Financial Advisor should rarely, if ever, be given even a limited Power of Attorney on your account, as their job is to advise, but let the client make the ultimate decision.

This article and the opinions expressed are meant to be for informational purposes only, and are not intended to serve as tax or financial advice. A professional accountant or financial advisor should be consulted if that type of advice is being sought.