Over the last week or so, I have read three different studies on personal finance that gave me cause for concern.  I can’t really say that the results of the surveys surprised me, but they were still unsettling.  Individually, they paint a bleak picture of the financial future for many Americans.  Together, they are a sad commentary on the general state of financial preparedness in our country.

The three studies were: Hewitt Associates’ survey of Retirement Income Adequacy; a Retirement Confidence Survey from the Employee Benefit Research Institute; and a Consumer Financial Literacy Survey from the National Foundation for Credit Counseling.  I will try to capture the highlights, or more appropriately, the lowlights, of the results in this article.

The findings show that the dream of a comfortable retirement is going to be out of reach for most Americans.  As bad as that sounds, it’s made more frustrating when we learn that, generally speaking of course, people are not taking the steps they should to correct the situation.  The Hewitt study shows that four out of five Americans are expected to fall short of meeting all their financial needs in retirement unless they improve their savings habits, or retire at a later age.

It is estimated that we will need a nest egg equal to 15.7 times our final pay to meet those needs when factoring in inflation and medical costs.  Social security should provide 4.7%.  That means that you will be responsible for the remaining 11 times your final pay.  So, if you earn $50,000 in your last year of work, you will need a nest egg of $550,000.  Hewitt’s study, which surveyed employees who are expected to work a full career, found that only 18% will reach that goal.

A lot of us have just given up.  The EBRI Survey found that seven out of ten people currently employed have given up on the idea of retirement.  That’s up from 63% in 2008, when the market plunge started eroding the values of our retirement accounts.  Right now, only 23% of people at or above retirement age continue to work.  So, pessimism has replaced confidence for most people when thinking about their retirement years.

And here’s where it gets really frustrating.  It doesn’t have to be this way!  We can make things better.  But our lack of financial literacy, and even worse, our apparent lack of concern, provides some tough challenges.   Here are some of the findings from the Consumer Financial Literacy Survey along with some commentary:

• Only 43% of adults keep close track of their spending, which is actually an improvement over the 2007 survey.  But 56% of us do not have a budget and more than 11 million adults do not monitor their overall spending.  This means that they don’t know how much they spend on food, housing, etc.  It’s pretty hard to plan when you don’t know where you are starting from.
• 33% of adults do not put any part of their income toward retirement.  This is up from 28% in 2008.
• 33% report that they have no savings at all.  That number is at 48% for Generation-Y adults!  Of those that report not having any savings, more than one in four say that, if faced with an emergency, they would charge the expense to a credit card or take out a loan.
• More than 13 million adults (6%) report carrying credit card debt of more than $10,000 from month to month.  26%, or more than 58 million adults, admit to not paying all of their bills on time. It’s interesting that as I am writing this story, it was just reported that US Consumer Credit increased by $955 million in the latest month.
• 64% have not ordered a copy of their credit report in the past year…despite the fact that it is FREE!
• 41%, or more than 92 million people, gave themselves a C, D or F on their knowledge of personal finance.
• 80% agreed that they would benefit from advice on financial issues from a professional.  As a Certified Financial Planner®, this one is especially frustrating.  I guess most people think they can’t afford to hire a professional.  After reviewing the above findings, I would say that they can’t afford to not hire one.   This brings to mind one of my favorite quotes…”If you think it’s expensive to hire a professional to do the job, wait until you hire an amateur.”

These findings make me want to launch into a rant about personal responsibility, living within our means, and the apparent indifference to change anything.  If we don’t take care of ourselves, who do we expect to take care of us?  Government?  Charity? Friends?  Family?  The answers have some moral implications and could lead to a political discussion which would take a lot more time than I have for this article.  Maybe another day.