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Data and Research March 30, 2015
Voya Identifies ‘Role Models’ for Retirement Readiness
By looking at the groups who scored highest in all categories in its Retire Ready Index, Voya offers an opportunity to better understand the traits, behaviors and practices that guide some individuals to greater retirement preparedness.
Reported by Rebecca Moore
The Voya Retire Ready Index shows Americans are generally behind in their retirement readiness.
Workers surveyed by Voya averaged an overall score of 4.1 out of 10, while retirees averaged a 5.5 score. However, the highest-scoring workers—identified by Voya as role models—received a combined average score of 7.0.
The findings show that this group was more likely to own a wide range of products and view their employer-sponsored savings plan as a major source of income in retirement. They were more likely to use planning tools, including those offered at the workplace, and to create strategies that factored in retirement income calculations and needs.
Role Models planned to save $10,000 or more in 2014 and were the least likely to have debt. They were also most likely to have a relationship with a financial professional and acknowledge the importance of saving as soon as possible.
Nearly 60% or more of the highest-scoring workers reported giving a great deal of thought to key retirement planning concerns, including retirement age and health care costs in retirement. This is more than four times the rate that the lowest-scorers reported about these items.
The role models were more likely to contribute the maximum amount to their workplace retirement plan than their lowest-scoring counterparts (28% vs. 14%, respectively) and more likely to contribute enough to earn their full employer match (36% vs. 25%).
The highest-scoring workers were far more likely to have access to web tools and education materials, phone-based advice and guidance and the services of a financial professional through the workplace. This group also reported taking advantage of those services at more than double the rate than that of the lowest-scorers.
Voya found the role models paid more attention to how their money was invested and were much more active about managing and modifying their investments to keep savings on track to meet their retirement goals. They were also more likely to have more products in their investment portfolios, which may help them better manage risk.
According to the Voya Retire Ready Index, 81% of role models had more than $50,000 in savings and investments, and nearly two-thirds (65%) had a written budget. The Index report is here.