Todd Howard

National Sales Manager, Retirement and Investment Only, Voya Investment Management
Todd Howard

PA: Can you tell us about the Retire Ready Index Study that your firm conducted?

Howard: Our Voya Retire Ready Index Study™ examined how people were prepared for retirement, both those who are working, and those who had recently retired—the retirees—and asked them how they were planning for and experiencing retirement. We did this through online surveys. There were three dimensions that we looked at: knowing, planning and having. 

The first, knowing, examined how knowledgeable they are about their needs in retirement and kind of preparedness they need. The second, planning, looked at what type of planning activities were they doing—this is where the advice component comes in. And the third, having, was whether they had calculated how much they would need in retirement to have sufficient income replacement and if they were on track to have adequate savings.  

The surveys asked all respondents questions in each of the three retirement readiness components and then calculated a score on a scale from zero to ten in each category, and then again on an overall basis to come up with a combined score. That combined overall score averaged a 4.1 out of ten for Workers, while Retirees averaged a 5.5. This shows that Americans are generally behind in their readiness, and when you look into the individual segment scores, you find that planning represents the most significant hurdle as well as the area with the most opportunity for improvement.

PA: What was your main objective with this survey? 

Howard: The Voya Retire Ready Index™ was developed to provide a measurable assessment of how working Americans are preparing for their future retirement, and how recent retirees are experiencing their retirement years. Would the highest-scoring people be those who are still working, or would it be those folks who have just retired and have a high level of retirement income? Most importantly, what characteristics did the successful groups have in common. Had they worked with a trusted adviser, for example?  

What we’re seeing in the industry is that the fiduciary regulation proposals look to make it, for lack of a better way to put it, more difficult to give advice at the participant level, if you’re working as a fiduciary to the plan. Many participants are telling us that they actually need advice, they need help, and they are looking for comprehensive financial planning. Another aspect we found, which I thought was pretty interesting, is sometimes participants are not looking for help with comprehensive financial planning from a trusted adviser. Sometimes they would prefer having the tools and educational resources so that they themselves can create a comprehensive plan. 

Through the Index we found, very simply, two approaches to building a comprehensive plan. The first is relying on a trusted adviser to make sure you put together a financial plan for retirement, both within your 401(k) and complimenting your 401(k). This is extremely important. But, it is equally important for people to be given educational tools alongside the 401(k) product. 

PA: Did you find any trends among the successful respondents?

Howard: There was a subset of workers and retirees who reported being more proactive and well-prepared, averaging the highest scores on the Voya Retire Ready Index™. We consider these individuals role models for readiness. Most common among these folks were having a formal written plan—nearly half of workers had one, as did more than two-thirds of retirees. Also, about eight-in-ten workers and nearly the same number of retirees had a specific strategy for investing their assets. 

The final point I would like to emphasize is those retired people who scored high and said they were enjoying a robust retirement had almost all worked with some sort of trusted adviser and had received advice. In the retirement plan industry, we’re all in this business to help people retire with dignity, and the participants really need help to do that. They need help from a trusted adviser and need help from advice type models.