Only 1 in 5 Employees Are Prepared for Retirement
Only 19% of employees in America are confidently prepared for retirement, according to Financial Finesse’s 2015 State of U.S. Employee Retirement Preparedness report. Of those who are not prepared for retirement, 76% have not run a projection to ensure that they are on track for the future.
Several years ago, the lack of retirement preparedness was attributed to a downturn economy, but the 2015 report shows that fewer employees now consider that a concern. In 2012, 47% of respondents said the U.S economy was their “main cause of financial stress,” but only 36% report the same feelings in 2015. 40% of respondents this year said they were confident in the way their investments are allocated, compared to 33% in 2012.
Men reported a higher level of preparedness than women: 24% to 17%, respectively. Both groups report similar values for “not on tract” and “don’t know.”
The report breaks the unprepared group into three categories: the unknowns, the underfunded and the underconfident. The first group does not know if they have enough funds, the second has some funding but potentially not enough, and the third group has the funds but lack confidence in their preparedness due to financial stress.
In order to get more employees on track with their retirement plans, Financial Finesse says employers must improve cash management.
“Employees that reported being on track are 39% more likely to have a handle on cash flow, 93% more likely to have an emergency fund, 59% more likely to be comfortable with debt, and 68% more likely to pay off credit card balances in full,” the report stated.