University and college faculty and staff can certainly be a brainy bunch. But when it comes to retirement preparedness, they are absolutely at the head of the class.
That is the finding of a new study by TIAA-CREF, which reveals that “employees at colleges and universities are far more likely to have taken concrete steps to plan and save for retirement.”
Considering the following:
• 42 percent of higher education employees have saved an IRA, compared to 34 percent of Americans overall
• 36 percent of higher education employees have met with a financial advisor, compared to 22 percent of Americans overall
• Only 16 percent of higher education employees have taken a personal loan from their retirement plan, compared to 29 percent of Americans overall
Clearly employees in higher education better recognize the importance of saving for retirement, and the folly of borrowing against that nest egg early-on.
Lessons For the Rest of Us
The findings come from TIAA-CREF’s Higher Education Survey, which polled 727 higher education professionals who are currently contributing to an employer-sponsored retirement plan. Statistics about the general population come from a TIAA-CREF survey, also conducted by KRC Research, which polled 1,000 adults nationwide with an employer-sponsored retirement plan.
Most importantly, the survey findings offer insights for retirement planners on what the individuals best prepared for retirement have in common. That, in turn, helps planners better advise clients on what they should be doing in their working years.
The first lesson is to absolutely max-out any retirement pension plan contributions possible. That is certainly the case of higher education workers. Nearly three-quarters (73 percent) reveal that their employers match retirement account contributions, and two-thirds (66 percent) say those matches range from 5 to 12 percent.
Maximum, and sustained, contributions to a retirement plan are in fact the single most important step that your clients can be taking in their career, said Eric Roberts, a consultant who specializes in retirement and financial education.
Asked what he observes to be the most common denominator among his best-prepared clients, “Each one has personally contributed to a qualified retirement program of some kind on a consistent basis over the entire course of their working years,” Roberts said.
Echoing the survey findings, Roberts says the best-prepared clients are also those who have sought out professional financial advisors early in their careers. “They have sought the counsel of people in their respective areas of expertise to help them with their needs,” Roberts said.
But why should academic types be so smart when it comes to retirement planning?
Perhaps it has to do with their inquisitive and visionary nature, suggests DeDe Jones, owner of Innovative Financial, LLC.
“The ability to look forward” is what distinguishes the best retirement planning clients, said Jones. “It’s attitude as much as anything. They’re willing to say, ‘OK, this is where I want to be. They’re willing to do, to one degree or another, delayed gratification.”
The Willingness To Delay Gratification