Employees continued to focus on retirement planning in the third quarter, a report released Friday by Financial Finesse found. Over one-third of calls to the financial education firm’s hotline were related to retirement planning, up from 25% in the second quarter.
Despite 91% reporting that they are contributing to their retirement plan, though, just 15% said they are on track to replace at least 80% of their income, down from 17% in 2010. Part of their lack of preparedness can be blamed on market volatility, Financial Finesse reports, although the percentage of investment-related questions rose just two percentage points from the first half of the year to 14%.
“There’s so much skepticism out there about our economic future, especially with current global financial crises occurring,” Liz Davidson (left), CEO of Financial Finesse, said in a statement. “If the economy takes another dip, we believe employees will be better equipped to handle it, but they will still struggle as many don’t have emergency savings nor can they rely on equity in their homes.”
The increase in retirement planning-related questions along with higher participation rates in retirement plans indicates that employees are recognizing a need to be more self-reliant, the report found. Employers are helping their workers by increasing awareness of retirement planning tools and resources.
In spite of increased awareness of retirement unpreparedness and market volatility, financial stress overall is dissipating, according to the report. Less than 21% of employees reported high or overwhelming stress, compared with 32.3% in 2010. This may simply be a factor of lowering the bar far enough, though. Financial Finesse attributes employees’ lower levels of stress to their improved financial wellness, a result of the “‘new normal’ which includes lower expectations in employer and government benefits and stock market performance.”
“Employees realize they are behind, but they’ve also been forced to equip themselves with the tools and knowledge necessary to be able to manage,” Davidson said. “They are handling their money better on the day-to-day basis, which has a huge impact on how much stress someone feels.”