The state of retirement planning in the U.S., per the 2025 Northwestern Mutual Planning & Progress Study,
the 2025 Schwab Modern Wealth Survey, and the 2025 Fidelity State of Retirement Planning Survey:
• The Good - 91% of households with a financial plan are confident about reaching their retirement goals.
• The Bad - Only ~30% of households will make the effort to create a financial plan. 62% of those without a plan
are uncertain about reaching their retirement goals.
• The Ugly - Of the 70% of households without a financial plan, 60% think creating a plan is too complicated
or they don't have the time to create one, 56% don't know how much to save for retirement, and 18% will never
seek any type of planning help at all.
In this day and age, when so much information is so accessible, the importance of financial planning should not be delayed and/or dismissed by so many. When you are growing up and you want to be able to go places on your own
and be more independent, you make the effort to learn how to ride a bike. Then you learn how to drive a car.
Then you learn how to travel by train, plane, or other modes of long-distance transportation. You have a goal in mind, and you pursue it. When you want to be financially independent, you get a job, open a checking/savings account,
and learn something about investing or are at least aware of financial markets. Why then is it too hard for 70% of households to dig into the details of their own finances to be sure that they will be adequately prepared for their financial future (whatever that time frame may be)? No matter how far away retirement may be, planning for it now
is at least as important (if not more important) as planning for a wedding, having children, buying a house,
saving for college, or any other significant financial concerns. To be clear, "planning for it" doesn't mean that you already have what you will need, it means that you know, with reasonable certainty, how much you will need,
and you have a plan in place for attaining that amount before you actually retire. The earlier that you start saving,
the lower the amount that you need to save each year, thanks to time and compound interest. The later you start,
the larger the amount that you need to save each year, increasing the degree of difficulty. In either case, knowing what
you will need in the first place is the key component, and you can't really know that amount with any certainty
without a financial plan.
Back-of-the-napkin scribbling, guessing, hoping, and/or reading financial advice articles that only present broad generalizations as specific goals is not sufficient in any way. You need to know the details of your specific situation, what you want to achieve, and a realistic way to get there. If you have a map you can always figure out how to get where you want to go, but without one you may find your way, or you may not. Why take the chance of failing financially (especially in your later years when financial security is needed the most) when a financial plan can act as your map to financial security? Yes, there can be complex decisions to be made, but personal finance is not rocket science,
it's not endlessly time consuming, and there's no need for it to be intimidating. It may be a bit of a struggle in
the beginning, like learning how to ride a bike, but once you understand what is needed you never forget and you are
on your way! I implore you to make the effort, just as you did with anything else that you wanted to achieve in your life.
Many people are shocked by the huge impact that seemingly small changes in a plan can make.
Here are 2 two "real life" examples:
• A .25% increase in the expected inflation rate can erase $200k from savings over time.
• Using a lower life expectancy for one spouse, if married (an important "what-if" scenario to model), decreased
total savings for a couple by $550k due to the survivor's tax status changing to "Single" (increasing taxes),
a decrease in Social Security income (even with the Survivor benefit), and an increase in savings withdrawals
due to the higher taxes and lower total income.
Your mileage will vary, and there are lots of other possibilities (positive and negative), but knowing what could happen
changes the way that you think and offers the ability to be better prepared for different scenarios. Those without a
financial plan have no good way to see the specific effects of a variety of decisions, or possible steps they could
take to influence the outcome. Having a comprehensive financial plan to refer to, and to guide you, gives you
greater confidence and control in reaching your goals. As Thomas Hobbes wrote in 1668, "Knowledge is power"!
Make the effort to understand your finances as well as you can, prepare for a successful future, and ask for help
when needed. If you can make a list of your current monthly expenses, and how they might change as you age,
that's the nucleus of a financial plan. Then use a good planning tool, or hire an adviser, to create the rest of your plan.
Don't make it harder than it needs to be, and don't worry about accurately predicting the future (you can't, so just do
your best), you just need a solid starting point and then you can adjust as you go.
As Ben Franklin said, "If you fail to plan, you are planning to fail", and there's no need for that!