Data & Research June 2, 2009

Pre-Retiree Retirement Security Confidence Declines

A Watson Wyatt survey found that workers aged 50 to 64 are much less confident they will have enough to retire than they were two years ago.
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The latest Watson Wyatt poll found 44% of respondents were confident of being able to enjoy retirement security five years after stopping work—significantly below the 63% who gave a similar answer in a 2007 survey, according to a release of the results.

The outlook was even bleaker when respondents were asked about their nest eggs lasting 15 years into retirement. Only 18% thought they have sufficient resources to be comfortable for this long, compared with 34% who felt that way in 2007.

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According to Watson Wyatt:

  • More active workers said the financial crisis has resulted in higher stress about retirement security (31%) than about job losses (24%) and access to affordable health care (15%).
  • While some workers are increasing their savings (19% have done so and another 34% are considering doing so), others have borrowed or withdrawn money from retirement savings (9%) or are considering doing so in the next 12 months (9%).

“Retirement security is a huge concern as individuals have seen significant amounts of their pension and retirement savings decline,” said David Speier, senior retirement consultant at Watson Wyatt, in the news release. “And the financial crisis has been especially damaging to older workers who are worried about potential job losses and have experienced higher stress levels over the past year.”

However, the survey also found that retirement concerns are significantly eased for workers who have a defined benefit plan rather than only a defined contribution plan: 55% of workers with DB plans are very confident of having enough resources to live comfortably five years into retirement compared with 38% of those with only DC plans.

Confidence is higher for individuals with DB plans for longer time horizons as well, although the farther into retirement individuals look, the more confidence falls across the board. When looking at 15 years out, only 26% of workers with DB plans remain very confident—nearly double the level of workers with DC-only plans (14%).

The survey, conducted in February, included responses from more than 2,200 full-time workers.

Deals & People June 2, 2009

Abigail Johnson Named to Chair Fidelity Fund Board

Abigail Johnson, daughter of Fidelity Investments Chairman Edward C. Johnson III, was named the new chair of the Fidelity board that oversees its 161 fixed-income and asset-allocated funds.
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The Boston Globe reported that Johnson has to be a member of each fund board; she is already trustee and chair for 23 of the funds and is expected to be elected to the remaining boards by July 15. The 161 funds handle about $650 billion of the more than $1.2 trillion managed by Fidelity.

Rumors have swirled on a regular basis in recent years in the financial services community that the younger Johnson was being groomed to replace her father as chair of the entire Boston-based investment company (see “Abigail Johnson Steps Down from Fidelity Board’).

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Fidelity spokesman Anne Crowley told The Globe the move is aimed at splitting the boards overseeing Fidelity funds and was not related to a succession plan. She noted that Abigail was elected to the new position by the other members of the eight-member board, which is dominated by independent trustees.

The younger Johnson already runs Fidelity’s personal and workplace investing unit, the company’s largest division, and has been vice chairman of FMR’s board for several years, according to the news report.

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