Both faculty and non-faculty members say they feel confident they will have enough money to pay for basic expenses in retirement—87% for professors and 80% for non-faculty members, according to Fidelity Investments’ 2017 Higher Education Faculty Study.
However, while both groups are good savers, they still face their own issues when preparing for retirement. For faculty, when it comes to grading their own financial literacy—from budgeting to investing—this group of educators admits they’d give themselves a “B” grade. And, while professors prioritize saving for retirement, non-faculty members’ top saving priority is paying off debt (38%), followed by paying daily/monthly household expenses (24%).
“We weren’t sure exactly how professors would grade themselves,” David Martin, vice president, Tax Exempt Client Analytics & Research at Fidelity Investments tells PLANSPONSOR. “We actually thought they would give themselves a higher grade, but the fundamentals of what they are doing would not reflect that, but they actually gave themselves a good grade.”
While professors feel comfortable with many fundamental financial concepts, there are other areas where extra study is needed. For example, nearly three in 10 (29%) professors aren’t sure of the investment mix of their retirement savings, suggesting they don’t know if the investments they selected align to a specific financial goal and timeline. The study found as faculty members age, their financial wisdom increases slightly: Boomer professors (born from 1946 to 1964) give themselves a “B+” grade.
The study identified three important insights about how educators feel about their financial knowledge and areas where they would welcome help:
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- Despite Advanced Degrees, Many Professors Feel Like Novice Investors: While they have mastered certain subjects in their professional lives, when it comes to investing, 37% of professors see themselves as “beginners.” This sentiment is greater for younger professors with 47% of Gen X faculty (born from 1965 to 1980) feeling inexperienced. Martin says this finding was a bit of a surprise also.
- Worried Retirement Savings Won’t Make the Grade: While saving for retirement is the top financial priority for professors (42%), and their reported average total savings rates for retirement (employee and employer contributions) is a strong 15%, more than half (54%) of faculty members are concerned that they could outlive their retirement savings.
- Extra Help Needed: When asked about where they need financial help, the top responses for professors are understanding Medicare/health care costs (34%) and choosing specific investments (32%).