Principal Financial Group has released to advisors the Savings-to Employment Income Ratio, a quick litmus test for estimating the health of investor’s retirement savings, according to the latest Principal Financial Well-Being Index.
In the Principal Financial Well-Being Index titled “When the Destination is Retirement: A Way to Keep Investors’ Plans on Track,” the group provides advisors with tips for using the ratio. The report also outlines the key drivers of the ratio that are most within investors' control: the savings rate, the age at retirement and the income replacement ratio.
With an advisor’s help, investors can adjust one or more of these drivers to help improve the success outlook and success of their retirement savings portfolio. The report also discusses the common misconceptions about retirement savings and gives financial professionals resources to explain these issues with their clients.
“Retiring with sufficient savings can seem daunting. Financial professionals play a critical role in helping clients build a personalized plan to meet their goals,” said Drew Denning, vice president of the retiree services division at The Principal. “This paper provides resources for financial professionals to help investors evaluate how well they are doing in saving for retirement and possible ways to revise their strategy so they have more confidence about their financial futures.”