In a retirement readiness index from Voya, retirees scored a little higher than workers, but both groups show room for improvement. Voya named respondents who scored a seven or higher “role models,” but as a group, retirees scored 5.5 and workers scored 4.1.
The overall scores were based on three categories. Both groups fared best in the “knowing” category, which measured respondents’ understanding of retirement and general financial concepts like how workplace plans are taxed, how target-date funds work and which types of investments represent lower risks. Here retirees scored a seven, while workers scored a 5.8.
The “having” and “planning” categories asked retirees slightly different questions from workers, but in general, the having category rated how well respondents have prepared for retirement. Retirees scored 5.3, and workers naturally scored lower at 3.5.
Both groups struggled in the planning category. Respondents were asked about the actual steps they’ve taken to prepare for retirement, like meeting with a financial planner, calculating how much they need to save or thinking about health care. Retirees scored a 4.2 and workers scored only three.
“While higher knowledge scores revealed that both groups have a relatively good understanding of certain financial concepts and rules, lower ‘planning’ and ‘having’ scores suggest that they did not or could not put that knowledge into action to achieve higher levels of readiness,” according to the report.
The report is based on two online surveys conducted last summer by Greenwald & Associates. The firm surveyed about 2,000 workers and retirees.
Two-thirds of workers said they felt at least confident about their chances for a financially secure retirement, but it may be entirely misplaced looking at other data that came up in the survey. Workers themselves had some misgivings, as 31% said they were very concerned about outliving their savings and 28% said they were extremely concerned.
That concern isn’t translating into action, either. Although 87% of workers said creating a holistic financial plan is an important step in planning for retirement, only 17% said they have a formal written plan and 31% said they have a written budget.
Almost half of workers have less than $49,000 saved, and 9% don’t even know how much they had saved.