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Retirement Planning > Retirement Investing

Few Americans Are Ready for Retirement: Can Financial Wellness Programs Help?

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Notwithstanding a strong U.S. economy, only one in four Americans say they feel financially prepared for retirement, according to a report just issued by the Certified Financial Planner Board of Standards: Close to 80% of participants surveyed say they are not reassured that they have the best retirement savings strategies available to them; the CFP Board states that this may have to do with indi­viduals not knowing what options exist.

Three in 10 respondents do not know whether their current employer offered a retirement savings plan. A quarter of respondents complain that saving for retirement is too complicated. (The poll took place in early April among a national sample of 2,200 adults.)

“With so many Americans getting a late start on retirement savings, the odds are high that they will be unprepared to maintain the lifestyle they’re accustomed to living,” according to Kevin Keller, the CFP Board’s chief executive.

“Americans know how important it is to save for retirement, but the truth is more than a third of those surveyed are overwhelmed by the process and, critically, many do not understand what products and resources are available to them,” he added.

Even so, 60% of survey respondents who receive retirement advice from a financial professional say they have “definitely” benefited from this service. In addition, 54% believe they would benefit from receiving professional retirement savings advice if they were to use it in the future.

According to the survey findings, nearly 50% of respondents think adults should start saving for retirement in their 20s. Few follow their own advice, the CFP Board noted. It said 26% of Americans delay saving for retirement until their 30s, while another 15% wait until their 40s. Worse, 8% wait to start saving for retirement until after they turn 50.

“The nuances to retirement savings vary based on circumstantial factors, such as what you can afford to save and what savings programs are available to you,” Keller explained. “This survey shows there is still a lack of clarity about what options are available to retirement savers, including ethical and competent financial advice.”

The executive says it is time for Congress, the administration and other stakeholders, including the CFP Board, to jointly develop new solutions to meet the retirement crisis. A report commissioned by the group and drafted by Fred Reish, an expert in retirement issues and partner at Drinker Biddle, will be released by year-end. The Retirement Issues Working Group, a blue-ribbon panel of CFP professionals that provides on-the-ground, practical experiences with retirement security issues, will contribute to the document.

Impact of Wellness Programs Separately, Financial Finesse’s latest review of financial wellness reveals that employees who used their financial wellness program regularly improve in all areas of financial planning. The greatest improvement shows up in retirement preparedness. In 2013, 21% of study participants said they were prepared for retirement. By last year, that number rose to 57%.

The study also finds that average retirement plan contribution rates have risen to 9.4% from 6.3%, and average contributions to a health savings account have increased by 41%, to $1,319 from $934.

Close to 70% of employees who use financial wellness programs say they are feeling confident in their investment strategy, up from 43% in 2013. The study includes results of a multi-year study focusing on close to 2,500 employees who regularly engaged with their employer’s personal financial wellness program from 2013 to 2018 to determine financial progress.

“The study’s findings have significant implications for what some industry experts have called a retirement crisis,” Financial Finesse’s chief executive Liz Davidson said in a statement.

“Employers have spent millions of dollars trying to address this problem,” she added, “through incentivizing employees to save by matching their retirement plan contributions, automatically enrolling employees into their retirement plans, and providing employees target date fund and professionally managed accounts designed to invest their assets in line with their retirement goals.”

Davidson explains that each innovation has been touted as the solution to the problem — and these have had an effect — but getting American workers to save enough to retire comfortably has more challenging than originally expected.

Financial Finesse also points out that a recent survey conducted by the Employee Benefit Research Institute and Greenwald & Associates, finds 70% of American workers believe debt negatively affects their ability to save for retirement. And 55% of workers say they are unable to save for retirement and save for other financial goals at the same time.

“Even the best retirement plans can’t compensate for an employee who simply is unable to save sufficiently due to high levels of student loan debt, rising health care expenses, and a society that places a premium on ‘living your best life’ with experiences that are largely out of reach for most Americans,” the study’s co-author Greg Ward, director of the Financial Wellness Think Tank, said in the statement. “The reality is that most employees need financial coaching to overcome these obstacles.”

According to Davidson, financial wellness programs are rapidly expanding, with more than 300 firms putting themselves forward as providers. These programs are a fast-growing employee benefit, and many employers consider them an imperative from a social mission perspective.

Financial Finesse pointed to a poll done by Alight Solutions in which 82% of employers state that offering a financial wellbeing program is “the right thing to do.” Plus, a MetLife study of employee benefit trends reveals that 53% of employees believe their employers have a responsibility for their financial well being. “Companies that ignore this issue put themselves at a distinct disadvantage when it comes to recruiting and retaining talent,” Davidson said.

Pension Problems Meanwhile, U.S. corporate defined benefit (DB) plans probably would like to forget this past winter, according to new research from Cerulli Associates. After tens of billions of contributions and higher discount rates improving funded status for much of 2018, volatility negatively affected corporate DB plans in the last days of the year.

“Significant volatility in financial assets and interest rates whipsawed these institutions just as underfunding concerns were beginning to ease early in the fourth quarter of 2018,” Cerulli states.

Through the first three quarters of 2018, the funded status of the average corporate DB plan steadily improved from a more than 85% funded ratio to the low-to-mid 90s in September, according to Cerulli. This is largely because many plans — especially larger ones — took steps to de-risk pension liabilities by freezing benefit accruals and/or closing to new participants after facing significant pressure to immunize the volatility of liabilities on corporate balance sheets and income statements.

Then, financial market volatility in late 2018 — brought on largely by concerns of slowing global growth — changed the game “seemingly overnight,” according to Cerulli. The Milliman Pension Funding Index says that the November-to-December experienced the largest percentage-point decline for the year, in many cases wiping out 2018 percentage point improvements in funded ratios in one month.

Then, in the first few months of 2019, as the U.S. Federal Reserve Board appeared to change track and hold off on further increases in short-term interest rates, financial assets rebounded and volatility largely became a positive. Despite the bounce back, Cerulli finds that these corporate DB plans are feeling shell-shocked.

“Recalling the 2007–2008 global financial crisis losses (which, on the eve of the crisis, was the last time corporate pension plans were fully funded), CIOs tell Cerulli that their companies cannot stomach such volatility again,” the research states.

Reach Michael S. Fischer at [email protected]. Emily Zulz is a former staff writer for


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