However, when asked to identify the financial planning activities they had already taken, only a minority reported completing some of the primary measures that can lead to improved retirement outcomes.
The Voya Retire Ready Index was designed on the premise that successful retirement preparation involves three important components: 1) sufficient knowledge and awareness of how to prepare (“knowing”); 2) accurate and comprehensive planning activity (“planning”); and 3) adequate savings to generate sufficient income replacement (“having”). The study incorporated two surveys that were conducted with Greenwald & Associates, Inc. The surveys asked current workers (the “Workers”) and recent retirees (the “Retirees”) a series of questions related to these three retirement readiness components. Using the survey results, scores were calculated on a scale from zero to ten in each category, and then again on an overall basis to come up with a combined score.
The findings show how Americans are generally behind in their readiness, and that planning represents their most significant hurdle as well as the area with the most opportunity for improvement. Workers who were surveyed for the Voya Retire Ready Index averaged an overall score of 4.1 out of ten, while retirees averaged a 5.5.
Despite scoring in the low to middle range on the Voya Retire Ready Index, both workers and retirees reported a high level of confidence in their financial preparedness to live securely throughout retirement. The study pointed to some gaps between the current perceptions many had about their retirement security and what they ultimately might experience. This included how long they expect to live in retirement and how long they expect the income from their personal assets to last.
Nearly two-thirds of workers (65%) and eight-in-ten retirees (82%) reported feeling at least somewhat confident in their ability to live securely throughout retirement. However, nearly six-in-ten workers (59%) were extremely or very concerned about outliving their savings. And while almost two-thirds (65%) of retirees expected to live more than 20 years in retirement, only four-in-ten (40%) believed their savings would last beyond 20 years.
The Voya Retire Ready Index report is here.