Products October 18, 2022

T. Rowe Price Adds Emergency Savings App

The tool can help employers to address workers’ financial emergencies.

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T. Rowe Price has launched an app called Waysaver to help workers build an emergency savings fund, the global asset management firm announced.

T. Rowe Price designed the app and algorithm for Waysaver while Galileo Financial Technologies is providing its cloud-based digital platform and program management services for the app’s operation.

“Employers are looking for solutions to help their workers balance competing priorities with continuing to save for retirement,” Kevin Collins, head of retirement plan services at T. Rowe Price, said in an email. “And workers are more likely to be attracted to a company that they believe cares about their financial well-being. Therefore we have made Waysaver available to employers who sponsor retirement plans record-kept by T. Rowe Price.”

Interest-bearing deposit accounts in which users can build emergency savings are offered by Delaware-based The Bancorp Bank.

“Addressing employees’ financial wellness is crucial to becoming a competitive employer, and research shows that workers are attracted to companies they believe care about their wellbeing,” adds Collins in a press release. “Waysaver is another piece to help our clients solve the employee recruitment and retention puzzle.”

Many workers grapple with financial security, as shown by their lack of savings to cover financial emergencies and proposed legislation to address short- and long-term challenges. A T. Rowe Price survey found that 45% of individuals use their credit cards for financial emergencies because of a lack of emergency savings.

“Waysaver is built upon our deep understanding of savings patterns and participant behavior, adapts as patterns change, and allows the employee to fully control and access funds as needed,” explains Collins.

Plan sponsors Clients of T. Rowe Price can add the app to their benefits this year. The app is currently restricted to T. Rowe record-kept plans.

Employers will opt-in to use the app and offer Waysaver to employees, according to Collins. Employees using the app can establish savings goals and a deposit account to receive automatic contributions. And employees can pause, add or adjust their savings.   

The app was built to offer an easy, automatic way to save for emergencies, adds Collins.

“We are excited to expand our plan sponsor clients’ benefits offering with an automatic, smart and integrated solution that helps protect employee retirement readiness,” he says. “Waysaver is built upon our deep understanding of savings patterns and participant behavior, adapts as patterns change, and allows the employee to fully control and access funds as needed.”

Waysaver is not part of the retirement plan itself, but instead, a separate program not subject to plan rules or requirements, Collins said.

“We believe this will help employers attract and retain talent by helping to improve the financial health of their employees,” he adds.

Galileo is financial technology platforms provider based in Salt Lake City. Global asset manager T. Rowe Price is based in Baltimore.

Data and Research October 18, 2022

Even Millionaires Worry if They Have Enough to Retire

Most high-net-worth individuals believe they will have enough to retire, but many still have lingering doubts.

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A new study from Natixis Investment Managers examines what it means to be financially secure in retirement and if $1 million will be enough to last more than 25 years.

The report, “The million dollar question: How much do I need to retire?” surveyed 1,617 individuals who have accumulated $1 million or more in investable assets and who participated in the 2021 Natixis Global Survey of Individual Investors.

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The survey found that on the surface, most high-net-worth individuals (79%) say they will be financially secure in retirement, but deeper down they are far less confident. Millionaires were nearly as likely to say it will take a miracle to achieve a secure retirement (35%) as investors overall (40%). One key reason may be that the million-dollar mark may not be as significant as it once was, the survey adds.

“It’s not that a million dollars isn’t a lot—it’s still the qualifier for most definitions of high-net-worth individuals—it’s just that there are a lot more millionaires,” the report says. “In fact, Capgemini’s World Wealth Report shows that the number of individuals at this asset level globally has nearly doubled from 10.9 million in 2010 to 20.8 million in 2020. That report finds large numbers of millionaires in North America (6.98 million), Asia (6.9 million) and Europe (5.36 million).”

High-net-worth individuals reported that they have accumulated more than four times the median assets of the overall population ($2 million vs. $450,000)—but they are not as far ahead when it comes to retirement savings, the report says. HNWI report retirement savings of $625,000, which comes out to 2.5 times the $250,000 median retirement savings of the overall survey.

The survey also found that HNWI report saving an average of 19.4% of their income, that rate is still just under 3 percentage points higher than the overall average of 16.6%, the report says. While the numbers look good on their own, the difference between the savings of HNWI and the rest of the population surveyed “is not great enough to merit any substantial difference in sentiment,” Natixis reported.

The report found that 79% of HNWI say they will be financially secure in retirement—but they still have lingering doubts.

Employment raises several questions for HNWI, the report says. Even though they plan to retire at the relatively early age of 63, almost six in 10 (58%) say they accept the fact that they may have to work longer than they plan. The need to work beyond their planned retirement age may result from a variety of situations, including a change in finances, health issues that require extended insurance coverage, needing additional income to care for an elderly parent or support an adult child.

A late-career layoff, or stepping aside to care for family, can have just as much impact on retirement security, with 44% in the HNW group who worry they may not be able to keep working as long as they would like to, the report says. Thirty-six percent worry they may never be able to retire, while 42% are so worried they chose to not think about it altogether.

HNWI also worry about factors out of their control, such as whether or not public benefits will still play a factor into their retirement plans.

This has especially concerned the 38% of investors with more than $1 million in assets who say it will be hard to make ends meet without public benefits.

Nearly seven in 10 also see inflation as a threat, the report says. After experiencing the highest inflation in 40 years, investors are wise to recognize the impact that rising prices can have on their finances in retirement. Costs have increased for food, energy and health care, with 65% of this group worried that health care and long-term care costs will impact their financial security in retirement.

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