Even later in life, peer pressure has the ability to make people do things they might not do otherwise, like save more for retirement.
A new consumer survey by the ING Retirement Research Institute found that more than half of all respondents said they would be motivated to save more for retirement if their nest eggs didn’t measure up to those of their peers. Twenty-seven percent said that the size of their retirement account was an important attribute for benchmarking themselves against others—much more significant than their material possessions (17 percent) or salary (16 percent).
Nineteen percent of those who are already retired said they still want to keep up with the Joneses when it comes to quality of life and financial independence.
“From restaurant reviews to healthcare referrals, consumers are increasingly scanning the social landscape for peer information and validation,” said Patrick Kennedy, chief marketing officer for ING U.S. Retirement. “This is also true for personal finance matters, such as saving for retirement. People are curious to know how they stack up to their counterparts, and a tool like INGCompareMe.com can provide a helpful benchmark. The data we collect can also be used to identify savings patterns and trends that support our broader goal of helping Americans retire in the manner they expect and deserve.”
INGCompareMe.com allows users to compare themselves to others on a wide range of saving, spending, investing, debt and other personal finance matters. Since the tool was launched in 2009, the website has received more than 1.8 million visitors.
Leveraging this data from its peer comparison tool, ING U.S. developed the ING State of Savings interactive map, available at INGStateofSavings.com. The map provides a state-by-state scan and ranking of how Americans say they are saving across the country, applying two different formulas.
One formula measures the average amount that residents of each state have collectively saved for retirement as a percent of their total estimated needs, with adjustments made for age. This metric is referred to as Savings Progress. According to the analysis, Hawaii, New York and Nevada ranked the highest in terms of savings progress, with respondents in those states saying they have saved between 48 percent and 51 percent of their estimated needs for retirement.
A second formula measures the average amount that residents of each state have saved up, as a multiple of their annual household income. This metric is referred to as Savings Score. According to the analysis, New Mexico, Vermont and South Carolina have saved between 3.78 times and 4.56 times their annual income for retirement.
Nationally, the average Savings Progress for Americans overall was 39 percent, while the Savings Score was 2.42.
The ING U.S. consumer survey found that over one-third of Americans believed where they live has a significant impact on their ability to save for retirement. This might help explain, in part, how well a state fared on the list developed with the Web tool data.
"Through this research and analysis, our goal is to offer Americans another thought-provoking benchmark for retirement savings. No matter how high or low a certain state is on this list, what ultimately matters is having a plan in place that meets an individual’s own personalized needs,” added Kennedy. "For most people, retirement today has been fundamentally redefined. As the responsibility to self-fund retirement continues to increase, individuals must find ways to improve their level of financial education, awareness and readiness."