More than half (52%) of U.S. retirement savers surveyed for State Street Global Advisors’ Global Retirement Confidence Survey reported being extremely or very confident they will reach their retirement goals. This is up from 21% in 2013.
Among respondents in the U.S., UK and Ireland, U.S. defined contribution (DC) plan participants are the most satisfied (56%) with their employer’s involvement in helping them prepare for retirement.
The survey found U.S. DC plan participants are contributing on average 10% of their salaries to their plans, versus 9% in Ireland and 8% in the UK. A majority of plan participants—more than 50% in each country—say they know and understand their plan investments and investment options. U.S. participants are the most confident. This may explain why fewer U.S. participants (38%) prefer their plan’s default investment option.
In addition, nearly one-quarter (24%) of U.S. participants said they are willing to take “high/somewhat high” risks in order to achieve higher returns.
This year SSGA introduced a financial wellness index to the survey to assess a broader picture of a participants’ financial life, including insights into the sufficiency of their financial resources to meet their needs and obligations, the manageability of their debt, overall sense of financial stress and their ability to deal with financial emergencies. Forty-six percent of U.S. respondents received a high financial wellness score, and 26% received a medium/high financial wellness score.
SSGA also tested respondents’ financial literacy with a standard set of eight questions, and while the U.S. scored highest, it was still very low on the scale, with 50% answering at least seven of the questions accurately.
SSGA suggests general best practices for DC plan sponsors to consider for getting employees on track for retirement:
- Implement thoughtfully designed default options;
- Auto-enroll employees;
- Auto-escalate employee deferrals;
- Design engagement efforts around personal inflection points;
- Ensure communications are on point and layered—start with the simplest message and layer in the more complex information.
“Employers should view increased satisfaction and stronger financial stability as a sign that retirement readiness is improving,” says Fredrik Axsater, global head of SSGA Defined Contribution. “Bringing financial wellness indicators into the picture can help employers focus on additional worries, such as debt management or emergency savings, that may be impacting how employees feel about and prepare for retirement. Seeing the bigger picture can help build a stronger future.”The complete survey report is here.