Data & Research February 2, 2016

Student Loans Put Retirement at Risk

Any discussion about improving lifelong financial security should include discussions about managing student loan debt, researchers conclude.
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Student loan debt was $1.2 trillion in 2015, compared to $.2 trillion in 2003, notes an Issue Brief from the Center for Retirement Research at Boston College. 

It now accounts for more than 30% of total household non-mortgage debt, having surpassed credit card debt in 2011. Fifty-five percent of households ages 21 to 29 in 2013 had student debt, with an average amount of $31,000.

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The researchers found that starting out $31,000 in the hole could have a big impact on households’ retirement preparedness. 

The National Retirement Risk Index (NRRI), which is based on the Federal Reserve’s Survey of Consumer Finances, a triennial survey of a nationally representative sample of U.S. households, shows that as of 2013, even if households worked to age 65 and annuitized all their financial assets (including the receipts from reverse mortgages on their homes), 51.6% were at risk. Sixty percent of households with student debt are at risk compared with 49.2% of those without this debt. In addition, those with student loans who have completed college have a slightly higher percentage of risk than those without student debt (52.9% versus 49.2%), but for households with student loans that did not complete college, the difference is 67.1% versus 49.2%.   

The researchers recalculated the NRRI by giving today’s working-age households the same level of student debt as those recently leaving college, and found that an additional 4.6% of households would be at risk of having inadequate income in retirement—from 51.6% to 56.2%. 

The researchers conclude that college costs should be included in broader policy discussions about how to improve lifelong financial security.

The Issue Brief may be downloaded from here.

Products February 2, 2016

T. Rowe Price Enhances Retirement Plan Participant Web Experience

The firm has launched a redesigned Workplace Retirement site.
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T. Rowe Price has officially launched a redesigned Workplace Retirement site for its nearly 2 million plan participants, aimed at increasing retirement readiness.

The new site is fully responsive, presenting the optimal browsing experience for the user’s device. “In today’s digital world, you only have a moment to catch a user’s attention, so designing a website that is intuitive and enables users to complete their intended tasks with ease is a top priority,” says Mary Ellen Whiteman, head of workplace investors experience at T. Rowe Price. “For example, we know that the primary reason participants log in to their account is to check their balance, so their account balance is prominently displayed no matter what device they are using, with quick and easy access to additional views.”

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Key features of the newly redesigned site include:

  • An enhanced retirement income experience – the ability for participants to create their own personalized confidence numbers; full integration with the T. Rowe Price FuturePath planning tool; the ability to aggregate and view balances, including outside assets;
  • Streamlined navigation for ease of use – larger, more interactive charts; a new account dashboard with the balance features used most by participants; and
  • New online loan center – tools, educational content, and videos to help participants make more informed decisions when they are considering taking a loan from their retirement plan; the ability to initiate and complete a loan request entirely online, on any device; a loan status tracker that shows where the loan is in the process and when the participant can expect to receive the funds.

T. Rowe Price says the new design is already having a positive impact on participant preparedness for retirement. The firm has seen a 13% increase in enrollment completion rates over the past year; the creation of personalized confidence numbers by more than 50,000 participants (an indicator of how likely it is that a user will meet his or her retirement savings goals on a scale from 0 to 100); and significantly greater mobile traffic to the new site—57% more mobile traffic versus the old site, indicating more investor engagement with their accounts on their preferred device.

Plan participants can access the new site as well as T. Rowe Price’s range of mobile apps at rps.troweprice.com.

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