Employees Want More Retirement Guidance

American workers are expecting more help from their employers in regards to retirement planning, according to a new study from American Century Investments. The survey, which included responses from over 2,000 defined contribution plan participants, found that retirement is top of mind for employees but they still need more help.

80% of participants believe that they would have saved more if their employer had given them more of a “nudge.” Participants were especially interested in investing help.

Employees are also open to more aggressive saving targets; 70% support automatic enrollment at 6% and nearly 80% support automatic contribution increases. 90% of participants had at least some regret about retirement savings.

Not saving enough for retirement was mentioned more frequently than not doing better in careers or personal relationships.

Other studies support Americans’ desires for more financial guidance and growing trust in financial professionals. The Allianz LoveFamilyMoney study found that 92% of respondents who have used financial professionals said they believe that the relationship is helping them achieve their financial goals, and 74% believe that the extra guidance is worth the cost.

Even respondents who have never used a financial professional believe that professionals are helpful in achieving financial goals.

The differences in behaviors and feelings of financial well-being between those who use financial professionals and those who do not are clear: 12% of those who have never worked with a financial professional are unsure of how to fund their retirement, compared to 3% of those who have worked with a financial professional.

60% of respondents who work with an advisor feel very secure about their retirement, as compared to 32% who do not, according to Deloitte.

Working with a financial professional also encouraged more savings, investing, and long-term goal-setting.

Deloitte also found that 78% of consumers surveyed in 2014 trusted their own financial professional, compared to 68% in 2012, indicating an ongoing upward trend. The positive sentiment towards financial professionals and openness towards receiving help should be good news to plan sponsors.

However, employers still have a lot of room to expand their engagement and guidance. Only 14% of respondents believed that their employers had done everything possible to help with retirement planning, and employers underestimate the amount of employees that want at least a “slight nudge,” according to American Century Investments.

When it comes to retirement security, women are still worse off

Women are more stressed out about retirement than men are, according to a recent MassMutual study. MassMutual found that 20% of women are at least moderately stressed in retirement, compared to 15% of men. Prior to retirement, 49% of women are at least moderately stressed, compared to 38% of men.

Women tend to have higher expectations than men do about free time and the social aspects of retirement. During retirement, more women report having new experiences, having more time for friends, and opening up more opportunities. Furthermore, more women, 34%, report having friends and family to depend on, compared to 22% for men.

When it comes to money though, women are still worse off. While women tend to be more financially secure during retirement than they expect to be, they are still less financially secure than men are.

MassMutual’s findings are consistent with other findings. A recent survey from PricewaterhouseCoopers found that 42% of women are comfortable choosing investments that are right for them, compared to 60% of men.

Investing decisions have an impact. Among both men and women, those who have a DC plan are happier and feel more relaxed than those who do not, according to the MassMutual report.

When speaking to Bankrate, Laura Scharr-Bykowsky, principal of Ascend Financial Planning, noted a key difference between men and women. She says that because financial security is a high concern for women investors, they tend to make more conservative decisions.

“If you’re in a money market with all cash because you’re afraid of market volatility, inflation is quickly eating into that cash,” Scharr-Bykowsky says. “It seems like a smart strategy, but that actually could be the riskier strategy. You’re going to outlive your money if you’re sitting on all that cash.”

The gap in comfort levels between men and women in making investment decisions is something that can be addressed now to account for the differences in financial security during the retirement years. Financial advisors can do more bridging the confidence gap and the retirement gap. Tailoring communications and engagement to women’s concerns and properly educating women on the risks of different investment strategies are important first steps.

Retirement Readiness: Designing an Impactful Program

Want to learn how you can design an impactful retirement readiness program for employees AND put in a place a financial wellness program that delivers a significant cost savings?

Then watch this video recording of the 30 minute webinar Boulevard R and Retirement Playbook hosted:

If you want to learn more, here is the presenters’ contact information.

Trisha Brambley
Partner
P.O Box 172 | New Hope, PA 18938
Mobile: 267.242.6019 | Office: 215.297.5494
trisha@rplaybook.com

Matt Iverson
Director
28 Second Street, Suite 300
San Francisco, CA 94105
Direct: (415) 250-6727
matt@boulevardr.com

Retirement Readiness Webinar- You’re Invited!

Want to learn how you can boost employees’ retirement readiness and help them reach their financial goals?

Then join us for an upcoming webinar on “Retirement Readiness: Designing an impactful program.”

Thu, Nov 8, 2012 2:00 PM – 2:45 PM EST

Wed, Nov 14, 2012 4:00 PM – 4:45 PM EST

In this short webinar, you will learn how to:

  • Design a measurable, holistic retirement readiness program
  • Use behavioral economics to nudge employees to save more
  • Affordably deploy today’s technology to engage employees and boost enrollment
  • Calculate the cost savings of helping employees prepare for retirement

Key findings will be presented from a collaboration with leading behavioral economist and NY Times bestselling author, Dan Ariely, as well as lessons learned from testing a new employer-branded iPad app with employees.

You will also learn about where plan education is heading in this informative webinar. Be our guest and help ensure sure employees are on track to reach their financial goal and achieve a secure retirement.