Discipline in financial planning leads to a sense of financial security and a greater likelihood of future happiness, according to the 2014 Planning and Progress Study, which Northwestern Mutual released this week.
But discipline is in short supply among U.S. adults. The study found that:
- Less than one in five U.S. adults (18%) consider themselves ‘Highly Disciplined’ financial planners who know their exact goals, have developed specific plans to meet them, and stick to those plans.
- One-third (36%) consider themselves ‘Disciplined’ planners who know their exact goals and have developed specific plans to meet them but don’t always adhere to them.
- Nearly half of adults (46%) are either ‘Informal’ planners or don’t plan at all.
- 70% of Highly Disciplined planners feel very financially secure, but only 51% of Disciplined planners, 34% of Informal planners and 17% of non-planners feel secure.
- Highly Disciplined planners who are retired are much more likely than non-planners to say that they are ‘happy in retirement’ (91% vs. 63%).
Sixty percent of the survey respondents said their financial planning could use improvement; the most common obstacle to improvement was lack of time, cited by 27% of those surveyed.
Young adults (ages 18-39) and older adults (age 60+) represent the most disciplined financial planners in the U.S. Adults ages 40-59 are the most financially unprepared and most likely to identify themselves as Informal or non-planners. The study also found:
- 59% of younger adults (18-39) and 54% of more senior adults (60+) identify themselves as disciplined financial planners; less than half of adults aged 40-50 believe they are disciplined.
- More than half (51%) of adults aged 40-59 identify themselves as Informal or non-planners; that number drops to 41% for young adults and 46% for older adults.
The study fund that 60% of the youngest Baby Boomers (50-59) know they need to up financial game, but they have the least appetite for it. Of Americans aged 50-59, 25% lack the interest while 13% cite lack of money. Among these young Boomers:
- 70% don’t use a financial advisor.
- 40% say they take an “informal” approach to financial planning.
- 12% wouldn’t call themselves planners at all – the highest percentage of any age group surveyed.
The 2014 Planning and Progress Study included 2,092American adults aged 18 or older who participated in an online survey between January 21 and February 5, 2014.
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