Employees are turning their focus to long-term financial issues like retirement planning as day-to-day financial issues become more manageable, according to Financial Finesse.
The firm found that in the second quarter of 2011, 60% of calls to Financial Finesse’s helpline were about long-term issues and 25% were about retirement planning issues in particular.
“The biggest thing is they’ve made a lot of improvements to their short-term finances, they’re continuing to reduce their debt, improving the day-to-day money management, building emergency funds,” Liz Davidson, (left), CEO of Financial Finesse, told AdvisorOne. “It’s a common thing when you get past the day-to-day you begin to take your blinders off and look longer term.”
It’s a function of moving from a state of crisis to looking longer term, Davidson says. Now that employees are past the crisis, they’re asking themselves, “Now that I have my financial foundation, what can I do next?”
What employees are finding is that they may not be prepared to retire. Although retirement planning questions are primarily proactive, according to the report, just 14% of callers said they were confident they’d be able to replace at least 80% of their pre-retirement income, in spite of a six-point increase in participation rates.
There are several factors that could be contributing to this disconnect, the report found. First, it may be that employees are simply in the early stages of improving their retirement preparedness. Just one-third of employees report they’ve run retirement projections.
Second, many employees turned away from retirement planning during the recession to focus on basic money management issues. Now that those pressures have been relieved, employees can focus on how unprepared for retirement they are.
Finally, concerns about the economy and stock market have not been erased. Employees have reason to worry about inflation, according to the report, and most have less equity in their home than they expected.