(Springfield, MA) – In its second version of a nationwide survey of American workers who are eligible to participate in an employer-sponsored defined contribution retirement plan, both men and women cite “saving enough for retirement” as their greatest financial concern – but men are paying more attention and taking more positive action. They are also relying more on financial professionals.
Despite a strong rebound in the equity markets and signs of a wobbly economic recovery, the proprietary survey, sponsored by MassMutual Retirement Services and conducted by Brightwork Partners, generally suggests that, compared to 2011 results, the pessimists are more pessimistic and the optimists are more optimistic. Among survey respondents, 34% believe the United States will be in a recession in the next 12 months, surprisingly higher than the 31% in 2011. In terms of perceived job security, the percentage of workers who are “very concerned” about losing their jobs is up by four percentage points (the pessimists). Conversely, the stat on workers who are “not concerned at all” about losing their jobs is up by 9 percentage points (the optimists). Health care expense as a savings objective is up 9 percentage points overall compared to 2011, a nod to heightened focus on health care costs in general.
Retirement tops the list of savings objectives. Overall, “saving enough for retirement” has surpassed “keeping up with monthly expenses” as the biggest financial worry, up significantly to 24% from 18% in 2011. It was also cited as a major savings objective by 63% of participants, 21 points higher than the second most-cited worry of “paying down debt.” On a positive note, participants in general are saving more, with the average retirement savings rate among those surveyed at 10.5%, up from 9% two years ago, showing an increased commitment to this goal.
The data also shows that there is huge opportunity for retirement plan advisors to help participants, particularly women, prepare for retirement. Only 28% of respondents currently have, or have had in the past five years, a relationship with a personal financial advisor. However, many more men have one (31%) compared to women (24%), and the gender difference here has increased since 2011 when 30% of men had an advisor vs. 27% of women. Significantly, retirement as a major savings objective is 20 points higher among participants with a professional financial advisor than for those without one (77% vs. 57% respectively). This suggests that having a financial professional helps bring more focus to the need to save for retirement.
Another interesting finding is that, although the retirement plan provider is still cited as the “most important source of investment information” by participants, professional advisors have displaced plan sponsors this year as the second most important source of this information. Of note, satisfaction with information from professional advisors is up sharply (47% “very satisfied” in 2013 vs. 25% in 2011), while satisfaction with information from plan sponsors is down sharply (10% in 2013 vs. 30% two years ago). Men are also much likelier to have a professional advisor and are more confident than women in virtually every aspect of retirement planning and defined contribution investment decisions.
In terms of being able to retire, trends among optimists and pessimists are divided at the age 50 mark. Workers age 50+ are less upbeat than younger ones and are likelier to expect health care costs and inflation to be higher. They also expect unemployment both nationally and locally to be higher. The proportion of workers under age 50 who are considering delaying retirement is up five points while the proportion of workers age 50+ who are considering delaying retirement is down five points. Thirty-seven percent of respondents have considered delaying retirement beyond their original target date, and that percentage jumps to almost 50% for people currently age 50 or older. In addition, 63% of people expect to work at least part-time in retirement and 54% expect they will need to reduce their standard of living. While women still expect to work to a somewhat older age, their average expected retirement age has come down slightly to age 66.4 (vs. 66.9 in 2011). The average expected retirement age for men has gone up to 66 compared to age 65.6 two years ago.
“The evidence that retirement is on the minds of virtually every American worker is encouraging,” says Merl Baker, principal, Brightwork Partners. “I’m also pleased to see that participants consider financial professionals an important source of investment information and that, among those who use an advisor, satisfaction is up significantly.” Higher advisor use may contribute to the fact that men pay much more attention than do women to fund performance (30% vs. 22%), income in retirement (26% vs. 18%), and asset allocation (25% vs. 15%).
“MassMutual Retirement Services continues to sponsor this important research to help us develop the critical educational resources that financial professionals, plan sponsors and participants need to understand what represents a sufficient level of income in retirement. You can collect a lot of data but, unless you are applying it for the benefit of your customers, you’re underserving them. Here at MassMutual, we continue to do our own research and leverage valuable research such as this study to create positive change,” says Elaine Sarsynski, executive vice president of MassMutual’s Retirement Services Division and chairman of MassMutual International LLC. “We believe MassMutual gives retirement plan participants the best chance at reaching their retirement goals because we care deeply -- we make it our top priority to share this important information. When our clients use the innovative tools we provide to see the big retirement picture, it creates the ‘aha moment’ that spurs them to take the right action,” she adds.
The nationwide survey was conducted online between February 18 and March 11, 2013, and included 2,081 defined contribution plan participants who are eligible to participate in a 401(k), 403(b), 457 or similar workplace retirement plan. Data was trended to the initial survey conducted two years ago (June/July 2011).
For more information about MassMutual Retirement Services, please contact your retirement plan professional or call MassMutual at (888) 626-4911.
Founded in 1851, MassMutual is a leading mutual life insurance company that is run for the benefit of its members and participating policyowners. The company has a long history of financial strength and strong performance, and although dividends are not guaranteed, MassMutual has paid dividends to eligible participating policyowners consistently since the 1860s. With whole life insurance as its foundation, MassMutual provides products to help meet the financial needs of clients, such as life insurance, disability income insurance, long term care insurance, retirement/401(k) plan services, and annuities. In addition, the company’s strong and growing network of financial professionals helps clients make good financial decisions for the long-term.
MassMutual Financial Group is a marketing name for Massachusetts Mutual Life Insurance Company (MassMutual) and its affiliated companies and sales representatives. MassMutual is headquartered in Springfield, Massachusetts and its major affiliates include: Babson Capital Management LLC; Baring Asset Management Limited; Cornerstone Real Estate Advisers LLC; The First Mercantile Trust Company; MassMutual International LLC; MML Investors Services, LLC, Member FINRA and SIPC; OppenheimerFunds, Inc.; and The MassMutual Trust Company, FSB.
MassMutual’s Retirement Services Division has been serving retirement plans for more than 65 years. It offers a full range of products and services for corporate, union, nonprofit and governmental employers' defined benefit, defined contribution and nonqualified deferred compensation plans. It serves approximately 3 million participants.
About Brightwork Partners LLC
Brightwork Partners LLC is a research-based consultancy focusing on product, service and distribution issues in retail and institutional financial services. Best known for its work among advisors, Brightwork supports clients who distribute retail investment and institutional retirement products through non-proprietary advisor channels. Brightwork’s research is based on work among business owners; high net worth individuals; retail advisors; participants and former participants in qualified plans; plan sponsors; advisors who sell retirement services; consultants; and TPAs who administer retirement plans. Brightwork Partners works with most of the leading mutual fund companies, insurance companies and broker/dealers active in these product areas.
Brightwork Partners LLC was founded in 1999. The firm is based in Stamford, Connecticut.