PGIM announced the launch of a new retirement confidence index on Monday that allows plan fiduciaries to access the financial and retirement confidence of some 300,000 U.S. workers.
The RetireWell Confidence Index is built from a dataset with responses from workers who have taken an online financial wellness assessment, and index interprets results on a scale of six confidence levels: very high; high; above average; below average; low; and very low.
“The index is an aggregation of the responses over time, where it removes any of the effects related to things like income, [because] individuals who have higher incomes are much more confident,” says David Blanchett, the head of retirement research at PGIM DC Solutions.
The index controls for the demographic factors related to confidence, including age, income, gender and marital status, says Blanchett, who helped to conceive of and supported developing the index.
Although individual sponsors are not able to access data specific to their plans, using the data may inform “a plan sponsor [regarding] how their participants are feeling about retirement versus national averages,” Blanchett says. “This [dataset is] trying to capture things that you wouldn’t normally get from the traditional quarterly report that shows you how your participant balances have changed over time.”
The current question used to estimate financial confidence asks respondents, “Overall, how are you feeling about your finances?” The corresponding four possible responses are: Stressed; OK; Confident; and I’m not sure, according to PGIM.
For retirement confidence, PGIM asks, “Do you think you’ll have enough savings for the retirement you want?” The three potential responses are: “Yes, I think I’ll have enough”; “I don’t think so, but I’m trying!”; and “I’m not sure.”
PGIM’s current retirement confidence index data is as of December 31, 2023.
In the most updated data sagging participant retirement confidence shows the overall confidence grade is “below average,” identical to the previous quarter and the same as one year ago.
Three years ago confidence levels were above average and five years ago the index grade was also below average, according to PGIM.
“As the markets have rallied [in 2024], and if the markets keep going up, I would imagine we’d see more and more improvements over time,” to retirement confidence, Blanchett says. “The perceptions of risk are changing a little bit, where people are more concerned about things like inflation than they have been historically.”
Data for the PGIM RetireWell Confidence Index is based on responses to an online financial wellness assessment offered by Prudential Financial since April 20, 2017. The questionnaire consists of approximately 25 questions, and more than 300,000 responses have been collected across three different versions since it was introduced. Historically, the assessment was primarily accessed by individuals either through Prudential’s recordkeeping platform or group benefits services.