Study Reveals Optimism for Financial Recovery

A recent press release from Northwestern Mutual highlighted a portion of their extensive report, 2021 Planning & Progress Study.  Released in in early July, its findings may not be as accurate as initially suggested, given the current COVID situation and its effect on the economy. But then again, one of the characteristics of this pandemic has been a constant shift of information, expectations, guidance, pessimism, and optimism.  So, to give some insight into what clients and prospects may be thinking, it’s important to share these results, even with the caveat that we’re still, as a society, in a state of flux.

The research indicates that more than one half (58%) of United States adults 18 or older say they are in financial recovery mode, and among them almost nine of out ten (89%) express confidence that they will ultimately achieve a full financial comeback:

  • 34% say they're in "late-stage recovery,” meaning while losses were suffered, these individuals have mostly, if not fully, recovered to pre-pandemic levels and have confidence that they’ll be able to achieve long-term financial security.
  • 47% say they're in "mid-stage recovery.” They suffered losses and have begun to make up ground but have not yet reached pre-pandemic levels and remain optimistic about achieving long-term financial security.
  • 18% say they're in "early-stage recovery,” meaning they suffered losses, are still in decline, and are unclear how they'll achieve long-term financial security.

The study also found some reasons for this optimism including: 

  • Average personal savings are up more than 10%.
  • Average retirement savings increased 13%.
  • Financial security is nudging upward from an average of 6.3 on a ten-point scale last year to 6.5.
  • A third (33%) of people say they have been able to save more over the last year.

Despite this optimism, there is some reason for concern. Christian Mitchell, Executive Vice President and Chief Customer Officer at Northwestern Mutual, stated, "The divide runs deep between those who will emerge from this extraordinary time with better habits and more savings, and those who have struggled greatly and have much more ground to make up.”

The statistics presented support this. Among the 58% of Americans who say they are in financial recovery mode, only 14% are actively planning more than five years out, and 24% are planning month-to-month.  "Being prepared for uncertainties may sound simple, but it takes on extra poignancy this year," continued Mr. Mitchell. “While it's great to see progress, it's also important to recognize that the setbacks are not equally distributed. No matter where people are on their financial journey, they need a road map; they need guidance; they need a plan."

The 2021 Planning & Progress Study explored many other financial issues facing Americans including savings, debt, work, retirement, and planning and I encourage all advisors and marketers alike to read this study – and other industry specific content -- to better understand what your clients and prospects could be are dealing with and thinking. 

Charles K. Hirsch, CLU, is the president of Hirsch Communications Consulting, LLC, a communications consulting operation in Florissant, MO. For many years, Chuck was the editor and publisher of Life Insurance Selling magazine, and has published several of the leading life insurance industry magazines. He continues to contribute articles on a regular basis to industry publications, in addition to providing a wide range of writing, editing, content development, and marketing services through his firm. He is a regular contributor to NAILBA Now e-Newsletter as well as to Perspectives magazine.