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Benefits March 7, 2013
No Backslide in Retirement Preparedness in 2012
March 7, 2013 (PLANSPONSOR.com) - There was no decline in retirement preparedness among employees in 2012 despite a decline in overall financial wellness, according to data from Financial Finesse.
Reported by Rebecca Moore
Sixty-eight percent of employees reported having a handle on cash flow—compared to 72% in 2011 and 64% in 2010—and a greater percentage of employees reported having borrowed funds or taken a hardship withdrawal from their retirement plans in 2012—32% versus 25% in 2011.However, 91% reported participating in their retirement plans, and 83% are saving at least up to the match.
Financial Finesse believes the stability of retirement preparedness measures is largely due to increased focus on retirement education by plan sponsors, coupled with strong market performance.
Seventeen percent of employees reported they know they are on target to replace at least 80% of their income in retirement. One-third are confident their investments are allocated properly.The percentage of questions received by Financial Finesse’s team of planners related to taxes doubled in 2012, but retirement planning held the top spot at 31%, the same as for 2011.Interest in cash and debt management fell, as did interest in investing.
Employee financial stress continued its downward progression, with only 18% of employees indicating “high” or “overwhelming” levels of stress in 2012, compared to 19% in 2011, 32% in 2010, and 33% in 2009.Sixty-four percent reported “some financial stress.”
Both the decline in financial wellness and the increase in the percentage of employees that reported having taken a retirement plan loan or hardship withdrawal were most pronounced among lower-income employees, women, and Generation X.
Financial Finesse’s 2012 Research Year in Review can be downloaded from here.