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Survey: Affluent New Jerseyans dialing back retirement goals

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Wealthy New Jerseyans are saving less overall for retirement, and men are saving more aggressively than women.
Wealthy New Jerseyans are saving less overall for retirement, and men are saving more aggressively than women. - (Merrill Edge)

Wealthy New Jerseyans are planning to save less money for retirement than their counterparts nationwide — and have dialed back significantly on their retirement saving goals in the past six months, according to a new survey by Merrill Edge.

Overall, New Jersey respondents said they anticipate saving $518,900 on average for their retirement, about $217,000 less than the national average.

The Merrill Edge Report is a semi-annual survey of "mass affluent" consumers, defined as people with $50,000 to $250,000 in total household investable assets.

The national survey, conducted in September, surveyed 1,016 Americans, including 305 in northern New Jersey.

The New Jerseyans on average said they anticipate saving $433,100 less than they did 6 months ago — and currently only have an average of $136,400 saved.

Ray Tenpenny, director and regional sales manager for Merrill Edge, said there has been a change in emphasis.

"The mentality of the mass affluent has changed from paying down credit cards to saving for retirement," he said.

He said the survey found that when it comes to retirement savings, New Jersey women are more aggressive than other women across the Northeast.

New Jersey women anticipate saving $508,000 on average for retirement, compared to $220,000 for Northeast women and $623,000 for women nationally. The New Jersey men anticipate saving $530,000 for retirement.

New Jersey mass affluents said a college education is worth going into debt for, with more planning to rely heavily on student loans than nationally (45 percent versus 31 percent.) The majority of Jerseyans (58 percent) said it's worthwhile for students to go into debt for college.

More than of New Jersey respondents intend to retire later than anticipated, and are shooting for age 67, one year older than the national average.

Retirement is the top financial goal for New Jersey respondents, followed by paying down debt. A large majority, 76 percent, said saving enough to live the lifestyle they want during retirement is their number one goal, and 76 percent said they plan to actively increase their retirement nest egg in the next 12 months.

The survey found that many New Jersey mass affluents are supporting their children and grandchildren financially. More New Jersey parents have adult children living at home than the national average, 42 percent versus 27 percent. New Jerseyans said they plan to contribute financially to their family members by helping pay for their children's college (46 percent) and paying partially or fully for their wedding (26 percent).

Tenpenny said the higher level of financial help that New Jersey parents provide their grown children impacts their retirement saving.

"I know if I'm an adult and I'm supporting an adult child living home longer, there are additional expenses to take into account, which means having less to retire on," he said.
Significant numbers of New Jerseyans use tax-deferred retirement saving accounts: 35 percent have a 401(k) and 22 percent have an IRA account, according to the survey.

And that's a good thing, Tenpenny said.

"Since the recession five years ago, the market is up over 80 percent, so if you held steady and you stayed the course in some of these retirement plans, you have done very well," he said. "But if for some reason you needed to dip into that because of an unexpected cost or you're helping your adult children, that could really push you behind on your retirement goal."

New Jerseyans have saved or plan to save $44,600 for their child's college education, less than the $63,400 national average.

The majority of New Jerseyans, 58 percent, said they learned to manage money through trial and error and 88 percent said parents and grandparents should help elevate the financial literacy of their children.

 

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Beth Fitzgerald

Beth Fitzgerald

Beth Fitzgerald reports on health care, small business and higher education. She joined NJBIZ in 2008 after a 34-year career at the Star-Ledger and has been reporting on business in New Jersey since 1978. Her email is beth@njbiz.com and she is @bethfitzgerald8 on Twitter.

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