Savers Least Confident about Retirement Preparedness

Individuals who save more and are more active in managing their retirement savings are less confident in their retirement security and the retirement decisions they make than are individuals with lower savings rates.

In examining the relationship between savings confidence and actual savings behavior, a study released by MassMutual Financial Group found only 44% of high savers (deferring 8% or more of their savings into a 401(k) plan) expressed confidence in their decisions, compared to 54% of low (deferral rates of less than 4%) and medium (deferring between 4% and 7.99%) savers. The study found high savers are more concerned that they will not have enough saved for retirement (44%) compared to low and medium savers (32%).

Sixty-five percent of high savers indicated they are not sure their investment decisions are the right ones for them, as did 60% of low and medium savers, the release said. In addition, those who are more active in managing their retirement savings (79%) are also more eager for help and information about investments and investing versus those who are less active (47%).

“The lesson is that some of the traditional assumptions about investment confidence, like deferral rates and active investment decisions, may indicate the exact opposite,” said Ian Sheridan, corporate vice president and chief marketing officer for MassMutual’s Retirement Services Division, in a press release. “We cannot assume that someone who saves aggressively and actively manages those savings is confident or secure in their financial situation.”

The study was conducted by Massachusetts Mutual Life Insurance Company using participants visiting the MassMutual Retirement Services Division Web site in September and October 2007. In total, the survey was completed by 17,414 individuals, participating in one of 2,300 retirement savings plans included in the study.