Q: Corebridge Financial’s latest survey found that most adults aren’t carving out much time for financial planning each month. What do you make of that finding?
Terri Fiedler: It’s eye-opening that the survey found 65% of adults dedicate two hours or less to financial planning each month, and more than 40% spend under an hour. Financial planning is one of the most important factors in securing the future you envision, yet it often takes a back seat to other priorities. The good news is that it doesn’t have to be one or the other – even starting with a few minutes a day thinking about your finances is a step in the right direction.
Q: When should people start to prioritize financial planning?
Terri Fiedler: Early action can make a big difference in long-term outcomes. Even starting in your adolescent years isn’t too soon. If you were to invest $5,000 at age 20 at a 6.5% rate of return, with additional contributions of $100 per month, it could grow to $280,187 by age 60. Waiting just three years before making that same investment could reduce this amount to $239,351.
It was encouraging to see in the survey that younger generations are getting serious about their finances and taking that initiative earlier in life than those before them. Nearly eight in ten (78%) Gen Z adults said they’ve already gotten serious about their financial future, even though the eldest Gen Zers are just 28 years old. That’s significant progress when considering the plurality of baby boomers and Gen Xers said they waited until after 40 to prioritize financial planning.
Q: What are some first steps people can take to improve their financial planning?
Terri Fiedler: Taking action can look different for everyone depending on where you are in your financial journey. If you’re just starting out in your planning, you can take small steps and build momentum. Evaluating your financial situation and setting clear goals are great first steps. From there, creating a budget can help provide a roadmap to reach those goals. If you’re someone who’s further along, perhaps already enrolled in your workplace retirement plan, a next step might entail engaging with a financial professional and beginning to think about diversifying your portfolio. For those closer to retirement, financial planning might be about transitioning your mindset from one of accumulating assets to how you spend them. In turn, you might also be thinking about securing sources of lifetime income such as an annuity to ensure your money lasts throughout retirement. It’s not a one-size-fits-all process, but there should be a common objective – to make continuous progress towards your goals.
Q: What if someone is motivated to get started on their planning but doesn’t have the confidence in their financial knowledge?
Terri Fiedler: That’s a very reasonable concern. We found that respondents were more likely to be confident in their ability to handle simpler financial tasks like managing day-to-day expenses and creating a budget. There’s a higher level of uncertainty around more complex financial topics. For example, 52% rated themselves as a novice when it comes to investing in stocks and mutual funds, and 49% rated themselves the same when it comes to understanding the power of compound interest. The good news is there’s interest in learning more about these more advanced topics. When we asked survey participants what financial topic they’d choose to instantly become an expert in if given the opportunity, investing in stocks and mutual funds was the top response, followed by planning and saving for retirement.
Building a foundation of financial knowledge can go a long way in helping you make informed decisions and take action.
What are some ways to build that financial knowledge and skillset?
Across generations, family, friends and colleagues are the most common sources used to strengthen financial planning capabilities our survey found. Beyond that, preferences diverge—Gen Zers and millennials often look to social media, while Gen X relies more on resources from financial institutions, and baby boomers tend to seek guidance from financial professionals.
The workplace should also be explored as a convenient source of information. Often, workplace retirement plan providers offer digital tools, webinars and workshops focused on financial wellness and planning. Your employer may even offer access to financial professionals who can help fill knowledge gaps and provide personalized guidance. You don’t necessarily need to be the “expert” – there are specialists who can help.
Thankfully, there’s a vast array of information out there to help sharpen your financial knowledge. But it’s important to be sure you’re using a trusted and reliable source.
Q: Any closing takeaways from the survey?
Terri Fiedler: Financial planning doesn't need to be overwhelming, but it should be a priority. Making a conscious effort to focus on your finances and build that muscle can make a big difference in achieving your goals – even small steps can make an impact. Establishing a foundation of financial awareness, literacy and skills early in life can provide a head start, but it's an ongoing process, so it's important to maintain focus and continue building those capabilities throughout life's phases.
Corebridge offers this interactive resource center with helpful tips and guidance on saving now while building toward retirement.
For additional findings from the survey, visit the Corebridge Insights & Education webpage.
