When it comes to American families and financial planning, perception is not reality. Although they are overwhelmingly optimistic about their financial future, their financial planning habits paint quite a different picture, according to a recent study commissioned by State Farm Life Insurance Companies and conducted by KRC Research.
The study reports that although 82 percent of Americans are optimistic about their financial futures, American families in reality are not adequately saving or protecting their finances. From saving habits and financial goals to life insurance coverage and retirement saving tools, American families have room to grow when it comes to protecting their financial futures. Americans cannot just “hope for the best”; they must take a critical look at where they are financially and lay out a clear roadmap that guides them to their hopes and dreams.
Key highlights from the study show the gap between perception and reality:
Perception: Most Americans (82 percent) are optimistic about their financial futures.
Reality: Nearly four in 10, more than 77 million Americans, say that they live paycheck to paycheck and are not able to put money into savings.
Perception: More than seven in 10 Americans are confident that they have enough life insurance.
Reality: Only 12 percent of Americans report having the industry recommended coverage of seven or more times the family’s annual income.
Perception: The majority of Americans (58 percent) are not worried about outliving their retirement savings.
Reality: Many Americans are not utilizing a full range of retirement tools. Social Security is the most prominent source of retirement income over other retirement savings tools, with a fifth of Americans reporting that it is their only or main source of retirement income. The sooner you start planning for your future, the better off you’ll be. Small investments made early can make a big difference in your financial health later in life. Don’t put off planning for your future.
Written by Adam Rope, a State Farm agent based in Waxahachie.