Are Americans of All Ages and Income Levels Shortsighted About Their Finances?

Americans today are increasingly responsible for saving a substantial portion of their income for retirement. A recent study, however, found that workers are primarily concerned about their ability to satisfy day-to-day needs, not future needs, even if they have their day-to-day finances under control or are financially literate. This brief asks whether this finding also applies at all ages and income levels. The discussion proceeds as follows. The first section introduces the data and methodology. The second section explores whether the financial assessments of young, middle-age, and older workers primarily reflect the household’s ability to meet day-to-day as opposed to distant financial needs. The second section explores the same issue for workers by income. The final section concludes that Americans at all ages and income levels are shortsighted about their finances and on their own cannot be expected to devote much effort to addressing distant financial problems. Given the significantly expanded reliance on household saving, this finding suggests a need to make it easy and automatic for households of all ages and income levels to save enough to secure a basic level of financial well-being in retirement.