Day-to-Day Finances Detract From Retirement Saving
Employees are making some positive changes to their retirement planning, but poor money management skills and long-term economic challenges present major obstacles.
Financial Finesse’s second annual research report about the state of U.S. employee retirement preparedness says 32% of questions received by the company’s on-staff Certified Financial Planner professionals in the second quarter of 2012 were about retirement planning issues versus 25% in Q2 2011, and a greater percentage of employees reported running retirement plan projections (39%) in the first half of 2012 versus the same period a year ago (33%).
However, as of June 30, 51% of employees said they did not have an emergency fund in place, and 33% reported not having a handle on their cash flow. The firm’s research division believes this may be why employees are not making more dramatic improvements to their preparedness despite short-term economic improvements.
According to Greg Ward, the firm’s research group director, “It is also the reason that we are seeing an increase in the percentage of employees reporting that they have taken a retirement plan loan or hardship withdrawal, at 34% in the first half of 2012 versus 27% in the first half of 2011.”
The full report is here.