The research conducted by InFRE suggests that when employees plan what they will do and how they will live in their retirement, their financial preparations improve. According to the report, “Without knowing what it will take to be happy in retirement (desired lifestyle) and the health that may be expected (good or bad), calculating future income need is really nothing more than a guess.”

InFRE speculates it may be that employees are not taking actions to financially prepare for retirement because the education they are receiving is not focused on the right message or provided effectively and in a medium that they are comfortable using. “Where education comes up short is helping workers understand what it means to plan and prepare for their retirement lifetime,” the report says.

Results of the InFRE Retirement Readiness Survey found almost nine in ten (87%) workers said they have few or no plans for their retirement – 32% have some plans but are mostly just looking forward to more leisure time; 29% have not really thought about it but are looking forward to no longer working; 26% are not sure or do not know what they will be doing in retirement. Only one in ten (13%) have made many plans and, among late career workers, this only increases slightly to 16%, the report says.

From this information, the Retirement Readiness Profile shows that only 26% of total workers are on track in preparing to be happy and engaged in retirement.

As for health, the survey shows that about two-thirds (65%) of workers say they expect to be healthy through all or most of retirement, while one-quarter (25%) indicated they will have some health limitations, and 4% expect to suffer from poor health. The profile shows that only 9% of workers across all career stages are on track for a healthy retirement.

Few workers are adequately preparing for their financial futures in retirement, according to the report. While six in ten (62%) reported they are participating in a savings plan at work, over half of all workers reported saving nothing at all for retirement (30%) or less than 5% of their income (25%) over the past year. This only changes slightly for late career workers to 22% having saved nothing for retirement over the past year and 19% saving less than 5%.

When asked about their total accumulated assets that have been set aside for retirement as a percentage of current household income, over one-quarter (26%) of all workers and 19% of late career workers reported they have no retirement savings. Another three in ten (34%) of all workers and two in ten late career workers (21%) have saved less than 50% of their household income for retirement. On the positive side, two in ten (19%) of all workers and 38% of late career workers have at least twice their current income in savings earmarked for retirement.

Only 12% are on track for being financially prepared for retirement, according to the Retirement Readiness Profile.

The InFRE Retirement Readiness Project and the General Population Retirement Readiness Survey suggest a new direction for employer-sponsored 457, 401(k) or 403(b) retirement plans is needed that can be more effective in helping workers prepare for their future years. InFRE has developed education materials for plans and proposes a new model for plan sponsors to:

• Provide a simpler, more automated plan design to address what is known about behaviors regarding money decisions.
• Expand the education message to address total retirement well being, how to make informed decisions about when and how to retire, and the risks that retirees face when trying to make their assets last throughout their lifetime.
• Develop more effective education programs, based on application-oriented adult learning techniques, to increase the relevance of education and motivate employees to take appropriate actions.
• Implement a more productive and cost effective model for delivering education and guidance tailored to meet the needs of the aging workforce.

The InFRE Retirement Readiness Profile and the coordinated education materials are designed to meet the needs of multiple audiences: workers, employers and plan providers. From the employees' perspective the Profile provides a method to identify how well they are currently planning for retirement as compared to where experts say they should be and increase their awareness of issues that should be considered to successfully prepare for total retirement well-being.

From the employers' perspective the Profile provides an aggregate assessment of their workforces to determine where future education/guidance should be targeted and a method to monitor and evaluate the effectiveness of their efforts. From the plan providers' perspective the Profile offers a tool that can help customer service staff and guidance counselors more productively meet employees' retirement planning needs in face-to-face or over-the-phone encounters by better understanding the unique needs of the participant audience and developing ways to motivate them to take action.

The InFRE report is here .