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Retirement Readiness Up, But Still Room to Grow

Financial readiness for retirement improved in 2017, but there still is room for improvement, say recently released studies.

In its 2017 Year in Review, Financial Finesse looks at employer financial wellness programs and their results. Among the gauges it reports on is financial readiness for retirement.


The good news: Financial Finesse says that 92% of the employees in their study participate in an employer-sponsored retirement plan. The less good news: just 76% are contributing as much as their employer’s matching contribution.

Financial Wellness Assessments

The good news: Financial Finesse says that the number of employees who took a financial wellness assessment in 2017 and who reported being on track financially for retirement was four percentage points higher than it was in 2016. The less good news: even with the growth, in 2017 that amounted to only 31% of those employees.

And for every demographic group, fewer than half said they were on track:

Age Group            % of Those Who Took an 
Assessment Who Are on Track
 55+                       41
 45-54                       33
 30-44                       28
 Under age 30                       25
 Women                       29
 Men                       36

Worse, more than 40% of every group but one did not know if they were on track, and 38% of those 55 and older did not know. Almost two-thirds of those age 30 and younger did not know.

Retirement Projections

The good news: Financial Finesse reports that employee interest in retirement projections regarding whether they are on track regarding the ability to cover their expenses during retirement is steadily growing:

Year           % of Employees Running a
Retirement Projection
     Change from
     Previous Year
 2015                    35                 -
 2016                    49     +14 percentage points
 2017                    53     +4 percentage points         

The less good news is that even with the growth, only slightly above half of employees ran such a test in 2017. Additionally, Financial Finesse found that simply running a report does not necessarily translate into being on track to cover expenses in retirement:

 Year            % of Employees Who
 Ran Retirement Projection
 and Are on Track 
      % of Employees Who 
      Ran Retirement Projection
      and Are Not on Track
 2015                 19                       16
 2016                 27                       22
 2017                 31                       22

However, there is at least some good news: the percentage of employees who ran a retirement projection and are on track to cover retirement expenses has been rising consistently

And more good news: The study says that employees who had more than one retirement projection run were more likely to be on target for covering their expenses during retirement: 43%, as opposed to 31% of those in 2017 who had only one.

Improving Readiness

“The problem of retirement under preparedness continues to be systemic, with insufficient percentages of virtually all demographic groups saying they are on track for a comfortable retirement,” says Financial Finesse.

But the good news: In the Questis white paper, “The New Retirement Narrative and What Plan Advisors Need to Know,” Martha Brown Menard, PhD, says that with the concepts about what retirement means changing, retirement planning is changing as well.

Menard says that she has found that interest is growing in being able to meet financial need throughout life, and that “goal-based planning” is becoming more important, across generations. “Boomers and the generations that are following them are demanding and using tools to pursue meaning later in life more than ever before — creating and actively contributing instead of turning into passive consumers as they age. Rather than accumulating an arbitrary sum for retirement and spending it down, more people want to be able to meet their financial goals at every stage of life, including retirement. The result is that goal-based planning is assuming increased importance for every generation, as is planning for income replacement during retirement,” she writes.

Financial Finesse suggests that the key to improving employees’ readiness to cover expenses during retirement is for them to facilitate employees’ adoption of new behaviors.

But how to do that? Financial Finesse reports that some employers in their study use technology and “live financial coaching” to accomplish that result. And it suggests that steps employers can take include:

  • marketing a financial wellness program as an employer-paid employee benefit;

  • communicating that financial wellness is a key component of an overall wellness program;

  • offering wellness incentives to participate;

  • offering unlimited one-on-one financial consultations by phone, in person or both; and

  • using technology to identify gaps in financial wellness, to channel employees to education and benefits to help close gaps, and to gauge progress.

Menard argues that instead of looking at an industry benchmark, plan sponsors may find it useful to see whether participants are progressing towards personalized goals. And this, she says, stars with helping employees address overall financial wellness. Says Menard, “Since no one can save for retirement when they are burdened by debt, making progress toward the goal of financial well-being will become the starting point for retirement planning, particularly for younger workers.”