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Key Takeaways
- For many individuals, the path to reach their financial goals - whether college or retirement - seems elusive.
- A five-stage roadmap can help Americans plot a path to financial security tailored to their circumstances.
- Individuals are encouraged to work with a professional financial advisor to personalize the roadmap.
For many Americans, finding a path to financial security seems more elusive than ever, as they now bear more responsibility for funding their own retirement. Increases in longevity mean that those savings must last longer, while they also need to prepare for medical expenses. Widening income equality has compounded these challenges for people of color, women, independent workers, and other segments of the general population. The COVID-19 pandemic has only exacerbated these challenges while adding new ones.
All this makes it a smart time for Americans to rethink their plans for achieving financial security.
Prudential’s roadmap to financial security breaks financial wellness down into five separate stages, starting with a strong financial foundation and progressing through a hierarchy of needs and objectives individuals must address as they move through their lives toward retirement.
Stage 1: Manage day-to-day finances and implement basic security precautions.
Stage 2: Establish emergency savings, insurance coverages, and a debt management strategy to protect against financial shocks.
Stage 3: Start to save for mid- and long-term goals while strengthening daily finances and protection plans.
Stage 4: Move forward on saving for retirement, healthcare expenses, and other goals, and explore ways to generate guaranteed lifetime income in retirement.
Stage 5: Develop a personalized retirement income strategy, while exploring new strategies for insurance coverage and legacy planning.
This roadmap can help individuals better understand whether they are on track to meet their goals and is a tool that individuals can use to personalize their financial wellness journey. Employers can further help their employees by offering a financial wellness program comprised of assessment tools, educational programs, budgeting and financial planning tools, access to investment and wealth-protection solutions, and advisory programs. Paired with financial wellness programs, Prudential’s five-stage roadmap outlined in this paper can help American workers plot a path to financial security.
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Oct 27, 2021
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