PGIM Launches Retirement Confidence Index

PGIM officially launched the RetireWell Confidence Index today, enabling plan sponsors to access a dataset with responses from 300,000 U.S. workers who have taken an online financial wellness assessment to measure their financial and retirement confidence.

“The index is an aggregation of the responses over time, where it removes any of the effects related to things like income, [because] individuals who have higher incomes are much more confident,” says David Blanchett, the head of retirement research at PGIM DC Solutions.

The index’s launch culminates a portion of the work on the data project Blanchett started when he joined the company in 2021.

“I started working closely with Prudential’s financial wellness team, [and] I learned they started offering an online financial wellness assessment in May 2017 that includes about 25 questions on a variety of topics related to financial and retirement confidence,” Blanchett says. The index provides “some insights into how overall retirement confidence and financial confidence have evolved over time.”

Evaluating Confidence Levels

The index controls for the demographic factors related to confidence, including age, income, gender and marital status, says Blanchett, who helped to conceive of and supported developing the index.

The index interprets results on a scale of six confidence levels: very high; high; above average; below average; low; and very low.

Although individual sponsors are not able to access data specific to their plans, using the data may inform “a plan sponsor [regarding] how their participants are feeling about retirement versus national averages,” Blanchett says. “This [dataset is] trying to capture things that you wouldn’t normally get from the traditional quarterly report that shows you how your participant balances have changed over time.”

The current question used to estimate financial confidence asks respondents, “Overall, how are you feeling about your finances?” The corresponding four possible responses are: Stressed; OK; Confident; and I’m not sure, according to PGIM.

For retirement confidence, PGIM asks, “Do you think you’ll have enough savings for the retirement you want?” The three potential responses are: “Yes, I think I’ll have enough”; “I don’t think so, but I’m trying!”; and “I’m not sure.”

Index Findings

PGIM’s current retirement confidence index data is as of December 31, 2023.

In the most updated data sagging participant retirement confidence shows the overall confidence grade is “below average,” identical to the previous quarter and the same as one year ago.

Three years ago confidence levels were above average and five years ago the index grade was also below average, according to PGIM.

“As the markets have rallied [in 2024], and if the markets keep going up, I would imagine we’d see more and more improvements over time,” to retirement confidence, Blanchett says.

“The perceptions of risk are changing a little bit, where people are more concerned about things like inflation than they have been historically.”

How to Use the Index

Although the index will be updated quarterly, insights can be pulled out more often by by PGIM, Blanchett says.  

For sponsors, the index, which can be viewed for free could also be useful for enhancing educational sessions, and “if you’re [a sponsor] looking at changing things, this will give [additional] insight [to] … [participants’] overall state of confidence,” Blanchett adds.

Sponsors may use the index to get greater “insight into how individuals’ confidence is changing over time, both in terms of retirement, as well as just general financial well-being,” Blanchett says. “You could look at single males with kids that are between these ages; there’s lots of cuts.”

Data for the PGIM RetireWell Confidence Index is based on responses to an online financial wellness assessment offered by Prudential Financial since April 20, 2017. The questionnaire consists of approximately 25 questions, and more than 300,000 responses have been collected across three different versions since it was introduced. Historically, the assessment was primarily accessed by individuals either through Prudential’s recordkeeping platform or group benefits services.