U.S. employees’ retirement preparedness has steadily improved this decade, according to new research, but it is on track to decline year thanks to jitters over politics and the economy.
Financial Finesse, which provides workplace financial wellness programs in the U.S., reported that 19.7% of employees in 2013 said they were on track to meet their income-replacement goal in retirement, up from 17.4% in 2012 and 16.6% in 2011.
The improvement was likely the result of more robust workplace financial education and advice, as well as enhancements to the design of company-sponsored retirement plans, Financial Finesse said in a statement.
The study found that retirement preparedness varied significantly by demographics. Take gender. Twenty-six percent of men said they were prepared for retirement, versus 17% of women.
Sixty-three percent of women could not say whether they were on track for retirement or had not run a retirement projections and 21% said they were definitely not on track, versus 57% and 17% of men, respectively.
Similarly, 35% of respondents with incomes above $199,999 claimed to be on track with their retirement preparations, compared with just 8% of those with incomes between $20,000 and $34,999. Conversely, those with lowest income were much more likely than high earners to be uncertain about their retirement preparedness or not on track at all.
And people 65 and older were much more prepared for retirement than those younger than 30.
The retirement-preparedness disparities were starkest between younger, lower-income women and older, higher-income men.
For example, 9% of women under 45 making less than $60,000 a year versus 40% of the men 55 and older making $100,000 or more a year said they were on target to replace at least four-fifths of their income in retirement.
Eighty percent of the women and 97% of the men reported that they contributed to a retirement plan at work.
Forty-nine percent of the women said they had a handle on their cash flow, compared with 89% of the men. Thirty-seven percent of these women said they were comfortable with their debt, versus 81% of the men.