Many Americans May Be Investing Too Conservatively to Meet Their Retirement Goals, According to Wells Fargo Study

Six in 10 workers with 401(k) plans want help with their investment choices

Forty-five percent of 60-somethings have considered how much they can withdraw each month from retirement savings

CHARLOTTE, N.C.--()--Many Americans may have an investment strategy that’s too conservative for accumulating a sufficient retirement nest egg, according to the 2016 Wells Fargo Retirement Study. As National Save for Retirement Week approaches (October 17-21), those surveyed face challenges with both choosing investments that are appropriate for their goals and consistently saving. On behalf of Wells Fargo, Harris Poll conducted a total of 1,253 telephone interviews between July 13 and August 19, 2016, with 1,003 workers age 30 or older who are currently employed and with 250 retirees.

Workers want help with investing

Although the study findings demonstrate the positive impact 401(k)-type plans have on retirement savings for workers with access to them, 58% who have a 401(k) plan available would still like more help with their plan to make sure they’re making the best investment choices for their retirement.

Survey results demonstrate that workers may have an investment strategy that’s too conservative. Almost six in 10 (59%) focus more on avoiding loss than maximizing the growth of their investments for retirement. Interestingly, this does not vary much across ages: 59% of 30-somethings, 62% of 40-somethings, 58% of 50-somethings, and 52% of those 60+ agree with that approach.

It’s important that people allocate their investments in a way that’s appropriate for their age and risk tolerance,” said Joe Ready, head of Wells Fargo Institutional Retirement and Trust. “This relatively conservative approach to investing among younger people may reflect an emotional reaction of day-to-day market volatility. However, it’s important not to have a knee-jerk reaction. It’s also important to make informed decisions about investing in a way that allows those with a long runway before retirement to use their biggest asset — time — to accelerate their savings growth potential.”

Illustration: A tale of two allocations

For illustrative purposes, consider what $10,000 invested in two different ways 40 years ago might look like today*:

  • A portfolio allocation of 70% stocks and 30% bonds would have grown to $581,295 from January 1, 1976, through September 30, 2016.
  • For the same time period, $10,000 invested in 30% stocks and 70% bonds would have grown to $336,715.

This simple example makes it clear that choosing the right mix of investments relative to your time horizon and risk tolerance is important when it comes to being well-prepared for retirement,” Ready said. “In addition to saving enough, there are two key actions that can help position a person for success in retirement savings. One: start early. Two: make sure you’re allocated according to an investment plan aligned with your goals, avoiding emotional reactions to market news and making intentional, informed decisions about investments in your retirement planning.”

* Portfolios rebalanced to target weights monthly. Stocks represented by the S&P 500 Index, bonds represented by the Barclays U.S. Aggregate Bond Index.

How much have they saved and when did they start?

Workers age 30 or older have saved a median of $40,000 toward a median goal of $500,000. One-third (34%) of workers has been consistently saving for retirement. Those who have saved consistently for retirement since starting their career have saved a median of $150,000 for retirement, compared to $20,000 median retirement savings of those who have not been consistent. Besides the difference in amount saved, there is also a significant difference in the age at which consistent savers started saving (25) versus those who haven’t been consistent savers (33). Access to a 401(k) plan may have played a role in the savings patterns and balances, as consistent savers also had access to a 401(k)-type plan at a greater rate (70% vs. 51%).

Not surprisingly, higher household income leads to larger amounts saved for retirement and being closer to reaching a retirement savings target. Still, even those with high income have a sizeable gap between what they have saved and what they think they will need for retirement. Those earning between $50,000 and $75,000 have saved $20,000 toward a retirement goal of $500,000, while those earning $75,000-$100,000 have saved $30,000 toward a $500,000 goal. Workers with an annual income exceeding $100,000 have saved $160,000; that is still only 16% of their target retirement savings goal of $1 million.

When you combine consistent saving and an age- and risk-based investment strategy, that’s the sweet spot we want people to achieve so they are in a better position for retirement,” said Ready. “In the survey, we heard from many looking for help to get to that sweet spot, acknowledging it was a challenge to get all the pieces to come together by the time they wanted to retire.”

Indeed, one in three (35%) workers feel they will not have enough money to survive in retirement, and 33% of retirees feel the same way. As a result, almost half (48%) of workers expect their standard of living will go down in retirement.

Starting the savings journey too late is a big factor, an attitude consistent across all age groups. Seventy-four percent of those in the workforce agree they should have started saving more for retirement earlier than they did. It is worth noting that this attitude is highest for 30-somethings, 79% of whom agree they should have started saving earlier. Even a majority of retirees (68%) feel this way.

When examining the average age at which people started saving, the 30-somethings started saving at age 26, 40-somethings at age 29, 50-somethings at 32, and those age 60 and up at 36. One in 10 of all ages say they have not started saving for retirement.

The fact that the 30-somethings are agreeing they should have started saving earlier — more so than the older cohorts — and that they actually started saving earlier than any other age group in this survey says to me that they really understand the importance of starting early and taking advantage of their biggest asset: the power of time,” Ready said.

What’s in a retirement plan?

When asked about what components made up a retirement plan, workers had varying answers, especially if they were or were not already saving consistently. For example, the majority of those who have not been consistent savers have not thought about how long their savings would last, how much could be withdrawn on a monthly basis in retirement, or how to invest their savings during the draw-down phase in retirement.

Considered or developed as part of a retirement plan    



Not consistent

How long retirement savings will last     65%   42%
Age they can afford to retire     73%   55%
Age they will begin taking Social Security payments     65%   54%
Monthly amount they can afford to withdraw from retirement savings     53%   35%
How to invest savings during draw-down phase in retirement     50%   34%

This suggests the mindset of the consistent saver may be what lends itself to developing a more holistic, comprehensive retirement plan,” said Ready. “The 401(k) plan helps with this as well, as it facilitates consistent saving and includes a level of education and awareness to help workers improve their retirement outcomes.”

As one might expect, the percentages for each of these factors move up with age. For example, 38% of 30-somethings have considered the monthly amount they can afford to withdraw, compared to 45% of those ages 60+.

When do they think they’ll retire?

The amount of retirement savings is directly related to when people plan to retire and begin drawing on those funds. Those surveyed who are still in the workforce plan to retire at age 66, on average. Notably, the average retirement age increases with age: 30-somethings report an average expected retirement age of 64 compared to an average retirement age of 70 for those age 60+ and still working. Of note among retirees, almost half retired sooner than they had planned (46%).

Half of today’s workers expect they will need to work until at least 70 because they will not have enough savings to live comfortably in their retirement years. However, among consistent savers, only 35% expect they will work until at least 70, compared to 59% of those who are not consistent savers.

There are a number of ‘levers’ that one can pull to work toward having enough savings to last throughout retirement, and retirement age is one of them,” said Ready. “Still, it’s important to be prepared to address retiring earlier than planned should an unexpected event arise.”

The 401(k) difference

This year’s study continues the trend of studying the impact of having access to a 401(k)-type plan. The differences in amounts saved among those with access to a 401(k)-type plan compared to those without access to such a plan are stark: $87,000 median saved for retirement vs. $10,000 for those without access. Accumulation goals also differ. These respective groups estimate needing a median of $750,000 vs. $500,000 for retirement.

The 401(k) plan may help people think more about what they need, but the most glaring difference to me lies in how much people with access have saved for retirement, comparatively. We found that middle-income (less than $75,000 household income) workers with a 401(k) plan could have saved double or even up to 30 times more than their peers without a retirement plan at work. That suggests the power of automated, systematic saving and investing for retirement through payroll deductions works. The next conversation is about expansion, how this can be available to more workers,” said Ready.

Workers themselves acknowledge the importance that a 401(k) plan plays in terms of being able to save more for retirement. For those with access to a workplace plan, 86% are enrolled and contributing to their account. Eighty percent of workers who are contributing to a 401(k) plan feel more secure because they’re contributing to the plan.

Survey respondents would like national leaders to consider retirement issues as a top priority, with 63% of workers and 73% of retirees agreeing that the incoming president needs to define a retirement policy for everyday Americans. Here’s one reason for this perspective: 82% of workers and 73% of retirees agree that retirement in America is in a crisis state.

Other attitudes about 401(k) plans:

  • A majority of workers (57%) have a 401(k) plan or equivalent available from their current employer, while 41% are on their own to proactively contribute to retirement savings plans outside of work.
  • Seventy-three percent of workers indicate they wouldn’t have saved as much for retirement if they didn’t have a 401(k) plan or would have saved more for retirement if they had a 401(k) plan; 71% of retirees feel the same way.
  • Seventy percent of workers who have consistently saved for retirement since the start of their careers have access to a 401(k)-type plan.
  • Among workers who do not have access to a 401(k) plan, two-thirds (66%) believe they would save for retirement if they had access to a 401(k). This attitude is most prevalent among workers in their 30s, with 79% agreeing.
  • A majority (64%) of all workers are in favor of requiring all employers to provide a retirement plan for all employees.
  • Fifty-eight percent of workers agree that employers offering matching contributions should allow their employees to apply part or all of a company match to student loan debt. Among workers in their 30s, 69% agree.
  • Following a job change or retirement, nearly six in 10 (58%) workers who are contributing to a 401(k) plan would move their funds into an IRA, another 401(k) plan, or cash out. Twelve percent remain unsure of what action they would take. Twenty-eight percent would opt to leave it in the current plan, a choice that is higher (38%) for those in their 60s.

About the survey

On behalf of Wells Fargo, Harris Poll conducted 1,253 telephone interviews of 1,003 working Americans 30 or older and 250 retired Americans, surveying attitudes and behaviors around planning, saving and investing for retirement. The survey was conducted from July 13 – August 19, 2016. Working Americans are age 30 or older and working full-time (or at least 20 hours if they are working part-time) or are self-employed. Retired Americans self-identified as retired regardless of age. Both working and retired Americans are the primary or joint financial decision-maker for their household.

Data were weighted as needed to represent the population of those meeting the qualification criteria. Figures for education, age, gender, race, ethnicity, region, household income, investable assets, and number of adults in the household were weighted where necessary to bring them in line with their actual proportions in the population.

About Wells Fargo

Wells Fargo & Company (NYSE:WFC) is a diversified, community-based financial services company with $1.9 trillion in assets. Founded in 1852 and headquartered in San Francisco, Wells Fargo provides banking, insurance, investments, mortgage, and consumer and commercial finance through more than 8,600 locations, 13,000 ATMs, the internet ( and mobile banking, and has offices in 36 countries and territories to support customers who conduct business in the global economy. With approximately 268,000 team members, Wells Fargo serves one in three households in the United States. Wells Fargo & Company was ranked No. 27 on Fortune’s 2016 rankings of America’s largest corporations. Wells Fargo’s vision is to satisfy our customers’ financial needs and help them succeed financially. Wells Fargo perspectives are also available at Wells Fargo Blogs and Wells Fargo Stories.

About Harris Poll

Over the last five decades, Harris Polls have become media staples. With comprehensive experience and precise technique in public opinion polling, along with a proven track record of uncovering consumers’ motivations and behaviors, Harris Poll has gained strong brand recognition around the world. Contact us for more information.


Wells Fargo & Company
Leslie Ingberg, 612-667-0265

Release Summary

As National Save for Retirement Week approaches (October 17-21), those surveyed face challenges with both choosing investments that are appropriate for their goals and consistently saving.


Wells Fargo & Company
Leslie Ingberg, 612-667-0265