Behaviors and attitudes help determine retirement readiness

People under the age of 35 are the least prepared for retirement, according to a new study by the BMO Retirement Institute. The study looked at the attitudes and behaviors that led to someone being better prepared for retirement.

What it found is that when educating people about their retirement plans, sponsors need to tailor the message to their audience and contain elements that individuals will see as personally relevant and important. It also found that the time remaining to retirement, and not age, was a key indicator of an individual’s financial preparedness for retirement.

The study asked the question, what constitutes financial preparedness for retirement? It gave the definition that financial preparedness is a set of behaviors that leads to improved financial planning for retirement.

“Individuals very often overlook emotional and behavioral factors that play an integral part in the retirement planning process. Instead, they are often consumed by the numbers and the amount of money they have to save in various accounts—the final step to a complex process,” the report stated.

BMO says that individuals must first be excited about the prospect of retiring to be motivated enough to seek information and advice and to finally take action to save for retirement. The final step involves choosing to save in a personal retirement savings account, an employer-sponsored retirement savings plan or both. 

“The stronger the attitudes and behaviors are before taking the final step of saving in retirement accounts, the greater the likelihood that the chosen financial action would be ‘adequate’ in ensuring a comfortable future retirement,” the report stated.

If attitudes and behaviors can predict financial preparedness for retirement, the earlier these motivations are encouraged, the better prepared Americans will be for retirement, according to BMO.

“As a result, the focus on retirement planning should be broadened from the traditional focus on dollars and cents in accounts to one that includes individuals’ attitudes and behaviors,” the report found.


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