Infographics
Financial Wellness: How to Be Resilient During a Crisis
This infographic is available as a poster.
This infographic is available as a poster.
Financial Wellness: How to Be Resilient During a Crisis
Due to the COVID-19 pandemic, 90% of Americans feel anxious about money. These stress levels are the same across all income groups.
Unfortunately, financially-stressed people are more likely to face physical and mental health challenges. For example, people with high debt stress during the 2008 financial crisis had higher levels of back tension, severe depression, and anxiety.
In today’s infographic from New York Life Investments, we take a look at the current state of financial health, and highlight ways people can improve their financial wellness during a crisis.
A Current Snapshot
Financial health is the degree to which people are able to be resilient and take advantage of opportunities over time. It rests on eight indicators:
- Spend: Spend less than income and pay bills on time
- Save: Have sufficient liquid savings and long-term savings
- Borrow: Have manageable debt and a prime credit score
- Plan: Have appropriate insurance and plan ahead financially
Based on these factors, individuals fall along a spectrum of financial health. In the U.S., only about 28% of people were considered to be financially healthy in a 2019 study.
Clearly, many Americans were already facing challenging circumstances prior to the pandemic. Here are a couple of the top issues.
More Complexity
Finances have become more complicated over time.
For many years, workers could rely on defined benefit pension plans that paid a set amount in retirement. In recent decades, pensions have primarily shifted to defined contribution plans. These require the employee to make investment decisions and build their own nest egg.
Unfortunately, financial education has not kept pace with the rising need for knowledge. Fewer than half of U.S. states require high school students to take a course in personal finance.
“Money Talk” Taboo
To build financial literacy, individuals would benefit from talking more openly about money. However, 44% of Americans surveyed would rather talk about religion, death, or politics than discuss personal finance with a loved one.
Fears of embarrassment and conflict are major emotional roadblocks that hamper financial progress. What can individuals do to improve their financial wellness, especially during a crisis?
Building Resiliency
People can follow a step-by-step strategy to optimize their financial situation.
- Assess their current situation.
Uncertainty can be a major source of anxiety. To identify the source of stress—and determine if it’s warranted—investors can take stock of their income, expenses, savings, and debts.
Financial self-awareness is positively associated with greater financial satisfaction, and stronger spending and investing decisions.
- Prepare for the worst-case scenario.
What can individuals do if they lose their job or see a prolonged drop in retirement savings?
Investors can consider various options, such as taking on freelance work, cutting unnecessary expenses, or increasing retirement plan contributions. Then, they can “stress test” their financial plan to account for these scenarios and begin preparing as best they can.
- Break goals into small chunks.
Specific, achievable, and measurable goals are easier to manage. For example, rather than having a goal to pay down $51,000 in debt, an individual could aim to make monthly payments of $850 over five years.
By setting smaller goals, investors can take action to make progress. Research has shown that achieving quick wins makes people more likely to achieve their financial goals.
- Improve financial knowledge and openness.
Investors can educate themselves as much as possible—people with high investment knowledge are proven to be more prepared and less anxious.
Has planned for retirement Feels anxious when thinking about personal finances Has emergency savings Low Investment Knowledge 62% 48% 78% High Investment Knowledge 73% 21% 90% People can also take steps to break financial taboos with loved ones, by starting with simple conversations about experience and building to more concrete discussions about family finances. The ability to talk about money is one of the most important skills for building financial literacy.
- Create long-term, purposeful goals.
Setting the right goals helps investors define their own parameters for success, which in turn keeps them focused and motivated. It’s also important to monitor goal progress regularly, to allow for portfolio or contribution adjustments as needed.
Taking Charge
Financial crises can strike at any point in time, whether it’s due to personal circumstances or an economic downturn.
To improve their situation, people can focus on the controllable elements of financial health: spending, saving, borrowing, and planning. This allows investors to emerge with a stronger, more resilient plan than they had before the crisis.
Infographics
The Top 6 Infrastructure Investment Opportunities
Based on funding from the Infrastructure Investment and Jobs Act, this graphic explores the top 6 infrastructure investment opportunities.
This infographic is available as a poster.
The Top 6 Infrastructure Investment Opportunities
The U.S. government is putting a focus on infrastructure investment. For years, the country’s infrastructure—critical structures and facilities like roads, power supplies, and internet access—has been in poor condition.
Now, the government is pledging billions of dollars in funding. In this graphic from New York Life Investments, we explore how this public commitment translates into six potential infrastructure investment opportunities.
Breaking Down the Infrastructure Investment and Jobs Act
The Infrastructure Investment and Jobs Act was signed into law in November 2021. It includes nearly $550 billion in new investments.
| Category | Investment Amount |
|---|---|
| Transportation | $283.8B |
| Broadband | $65.0B |
| Energy & Power | $65.0B |
| Water | $63.3B |
| Climate & Cybersecurity Resiliency | $47.2B |
| Environmental Remediation | $21.0B |
Based on these commitments, here are the six categories that present potential infrastructure investment opportunities.
1. Transportation
52.0% of new government funding
Because infrastructure has been underfunded for some time, transportation systems are in a state of disrepair.
- 43% of roads are in poor or mediocre condition
- 231,000 of the country’s 617,000 bridges are in need of repair or preservation work
New government funding will enable the expansion and repair of transportation infrastructure.
The infrastructure investment opportunity: Funding could increase revenue and provide stable long-term contracts to engineering, materials, and construction companies.
2. Broadband
11.9% of new government funding
Millions of Americans don’t have access to broadband (high speed) internet, and the number of people who don’t use it is even higher due to affordability issues.
- People without access: 14.5 million
- People who don’t use broadband: 120.4 million
New government funding will increase access and help reduce prices.
The infrastructure investment opportunity: Funding could boost the customer base and revenue of internet service providers.
3. Energy & Power
11.9% of new government funding
The U.S. has set a goal to have net zero emissions by 2050, yet the country gets most of its energy with fossil fuels.
| Source | Percent of U.S. Energy Consumption in 2020 |
|---|---|
| Petroleum | 34.7% |
| Natural Gas | 34.0% |
| Renewables | 12.5% |
| Coal | 9.9% |
| Nuclear | 8.9% |
New government funding will help build electric power transmission lines and facilitate clean energy technology.
The infrastructure investment opportunity: Funding could boost the revenue of utility, manufacturing, and renewable energy companies.
4. Water
11.6% of new government funding
U.S. water infrastructure is aging, with 14-18% of potable water lost through leaks. The annual costs of wasting this treated water is projected to increase from $7.6 billion in 2019 to $16.7 billion in 2039.
New government funding will modernize water infrastructure, invest in water storage and recycling, and remove lead pipes.
The infrastructure investment opportunity: Funding could boost the revenue of engineering firms and companies that build, install, and repair water pipes.
5. Climate & Cybersecurity Resiliency
8.7% of new government funding
Climate disasters and cyber attacks are leading to increased costs & destruction of infrastructure. In 2020, there were 22 U.S. climate disasters that each cost over $1 billion in damage—with a total cost of $100 billion.
| Type of Disaster | Cost in 2020 |
|---|---|
| Tropical Cyclone | $57.5B |
| Severe Storm | $35.5B |
| Wildfire | $17.3B |
| Drought | $4.7B |
New government funding will invest in protection against cyber attacks, floods, droughts, and other climate disasters.
The infrastructure investment opportunity: Funding could boost the revenue of companies involved in cybersecurity, weatherization, environmental consultation, and construction.
6. Environmental Remediation
3.9% of new government funding
Contaminated sites are causing environmental harm or hindering land reuse, and there are more than 450,000 of them across the country. New government funding will clean up contaminated land, reclaim abandoned land mines, and plug orphaned oil and gas wells.
The infrastructure investment opportunity: Funding could boost the revenue and long-term contracts of environmental remediation companies.
Public Funding, Private Infrastructure Investment Opportunities
A boost in government funding is likely to create increased activity in private infrastructure-related areas:
- Engineering
- Construction
- Materials
- Internet Service Providers
- Clean Energy Tech
- Pipe Installation
- Cybersecurity
- Environmental Consultation
By paying attention to where the money is going, investors can consider a variety of categories that provide critical services—and capitalize on upcoming trends.
Infographics
What Retirement Barriers do Americans Face Today?
Retirement barriers are making it difficult for people to feel good about their future. See how advisors can help in this infographic.
What Retirement Barriers do Americans Face Today?
Today’s definition of retirement is much different than before.
It’s no longer a postscript to career, but instead a time to enjoy freedom. This could be the freedom to learn new hobbies, the freedom to travel, or the freedom to start an online business. Unfortunately, this freedom is proving to be difficult to achieve for most.
In this infographic from New York Life Investments, we discuss the retirement gap—what it is, why it exists, and how advisors can help reduce it.
What is the Retirement Gap?
New York Life Investments partnered with AARP to survey over 3,000 Americans about their retirement plans. They uncovered that across all ages, there was a gap between i) people’s perceived importance of retirement planning, and ii) their actual preparedness.
| Age group | Perceived importance of preparing for retirement | Actual preparedness |
|---|---|---|
| 20s | 77% | 45% |
| 30s | 87% | 41% |
| 40s | 87% | 40% |
| 50s | 92% | 47% |
| 60s | 93% | 58% |
| 70-74 | 84% | 70% |
Based on a survey of 3,025 Americans aged 20-74.
These results suggest that the status quo around retirement planning isn’t working for most people. This is further supported by other survey findings. For example, 65% of respondents said they didn’t feel optimistic about retirement.
What Barriers do Americans Face?
The survey determined that Americans are struggling to overcome five retirement barriers. Let’s hear from survey respondents to learn more about them.
#1: Managing multiple priorities
Juggling between retirement savings and more immediate needs such as childcare can lead to emotional overwhelm.
”It’s difficult to put substantial money in a 401 or IRA while also paying off debt at the same time.”
– Alex B. (20s)
#2: Figuring out how much is enough
Uncertainty about how much savings is needed causes many people to avoid retirement planning altogether. The problem can simply feel too large to tackle.
”Retirement and aging are not things I look forward to, mainly because of the lack of preparation and fear of the unknown.”– Janet F. (50s)
#3: The complexity of resources
Many Americans find retirement resources are too difficult to understand. This issue is related to a lack of financial literacy, which happens to be a growing problem in the United States.
”They don’t break it down into where you can understand it.”– Amy E. (40s)
#4: Lack of representation in the marketplace
People feel that available resources are not speaking to them, or are not relevant to their life circumstances. This type of “alienation” can discourage people from seeking professional advice.
”I don’t see people who are anything like me. I see representations of upper management people…and I know that won’t be my reality.– Penni B. (60s)
#5: Don’t know who to trust
People feel that the financial industry does not have their best interests in mind. They often seek information from sources who seem more like “them.”
”I avoid professionals because I hear so many stories of financial planners who cheated people in their investments. I believe in some of the people I follow on YouTube more.”– Dino M. (50s)
Bridging the Gap
Altogether, these barriers highlight a disconnect between who the market is targeting, and who is most in need of help. Financially advisors have the power to bridge this gap by doing two things.
The first is to view investors as “customers for life”. Large firms often push advisors to work with clients who have a greater level of assets—typically those in their 40s or older. This could create a major challenge for younger generations who hope to one day retire.
For example, survey data shows that people’s expected retirement age increases as they grow older. This suggests that young adults are struggling to develop the right financial plan for their needs.
| Age of respondent | Expected retirement age |
|---|---|
| 20s | 55.7 |
| 30s | 60.7 |
| 40s | 64.6 |
| 50s | 64.9 |
| 60s | 67.8 |
Based on a survey of 3,025 Americans aged 20-74.
By viewing investors as “customers for life”, advisors have the opportunity to steer people onto the right path at an earlier age. This can help them create positive impact in their communities, as well as grow their business through word-of-mouth marketing.
The second thing advisors can do is reach out to underserved communities. Data shows that Black and Hispanic Americans are less likely to have retirement savings, while those that do feel much less confident.
| Ethnicity | Have retirement savings | Perceive retirement savings as being on track |
|---|---|---|
| White | 80% | 42% |
| Black | 63% | 23% |
| Hispanic | 58% | 22% |
| Asian | 85% | 47% |
Source: Statista (2021)
Up to this point we’ve focused on the financial aspect of retirement, but what about health & wellness?
Redefining Retirement: Health, Wealth, and Self
The rising importance of personal health has been a major phenomenon of the COVID-19 pandemic. According to McKinsey, 48% of Americans increased their prioritization of wellness compared to 2-3 years ago.
This shift in thinking must also be reflected by retirement plans. One way to do this is to integrate health & wellness considerations alongside wealth.
For example, poor physical health can significantly drive up the costs of retirement. In fact, the average American aged 65-84 already spends nearly $17,000 per year on healthcare.
Mental health, on the other hand, can be severely affected by money-related stress. Symptoms include a loss of sleep, high blood pressure, and a negative impact on personal relationships.
Perhaps most interesting is that the relationship between health and wealth goes both ways. In other words, wealth can be a driver of better emotional and physical health. The following table shows how individuals with greater income felt better about their wellbeing.
| Income level | Consider themselves to be emotionally healthy | Physically healthy |
|---|---|---|
| Under $40K | 50% | 47% |
| $40K - $75K | 63% | 56% |
| $75K - $100K | 68% | 63% |
| Over $100K | 73% | 68% |
Based on a survey of 3,025 Americans aged 20-74.
To develop a more holistic retirement plan for their clients, advisors must transform from financially focused representatives to holistic life coaches.
Barriers are Meant to be Broken
With the concept of retirement, many Americans feel like they are on the outside looking in. They suffer from a lack of representation, a mistrust for the financial industry, and have few resources that are catered to them.
What’s needed is a democratization of retirement planning.
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