Age, Personality Affect Retirement Planning Decisions
How aggressively Americans save for retirement is largely dependent on the age of the individual and their attitude toward financial planning, according to the 12th Annual Retirement Confidence Survey (RCS) survey released today.
The RCS was conducted by the Employee Benefits Research Institute (EBRI) and underwritten in-part by the Society for Human Resource Management, the world’s largest human resources association. The survey finds that, in addition to an individual’s age, attitude and behavior toward money and financial planning have a tremendous effect on the overall amount a person saves for his or her retirement. Workers ranging in age between 40-59 were more inclined to have saved for retirement than workers between the ages of 20-39.
The average worker today expects to retire at 65. Interestingly, 37 percent of younger workers, while saving less for retirement, indicated they wanted to retire at the age of 61 or younger. The survey also indicated that both older and younger workers have an unrealistic estimate of how much income they will need in retirement.
"Human resource professionals must continue educating and working with employees about their financial planning for retirement," said SHRM Executive Vice President and COO Susan R. Meisinger, SPHR. "Employers are already providing helpful tools and resources that help employees take some of the fear and guess work out of financial planning. The next step is getting employees to better utilize these resources in order to prepare them for their golden years."
According to the 2001 SHRMâ Benefits Survey, 43 percent of employers provided retirement planning services for their employees and 28 percent offered financial planning services. The Retirement Confidence Survey, however, showed that many employees maintain an unrealistic understanding of their financial needs for retirement, with 17 percent saying that they would need less than half of their pre-retirement income to live comfortably.
The survey characterized retirement planning decisions based on five personality types:
- Planners: 23 percent of Americans are disciplined savers and financial risk-takers.
- Savers: 19 percent of Americans are careful with their money, but save more than invest.
- Strugglers: 18 percent of Americans frequently experience financial setbacks that deter them from their goals.
- Impulsives: 24 percent of Americans are prone to impulse buying and financial setbacks.
- Deniers: 15 percent of Americans dislike financial planning and seldom plan ahead for financial concerns.
"Older workers ages 40-59 are more likely than younger workers ages 20-39 to report that they or their spouse have saved for retirement, yet those ages 20-39 plan to retire earlier," said Dallas Salisbury, president and CEO of EBRI and an SHRM board member. "Planners and savers are those who tend to be more careful and disciplined with their money, compared with strugglers, impulsives, and deniers. Knowing your personality type can help you take control of your financial future, and the RCS provides a benchmark to do that."
Other highlights from the Retirement Confidence Survey:
- 41 percent of workers who say they have received educational materials from their employer in the last year, 82 percent reported receiving a retirement benefit statement or brochure.
- 56 percent of younger workers said they expect that their biggest source of retirement income retirement will come from personal savings; 38 percent of older workers believe the same.
- Workers ages 20-39, and worker ages 49-59 all feel equally confident about having enough money to live comfortably throughout their retirement years (69 percent and 70 percent respectively).
The full survey can be found at: http://www.ebri.org/rcs/2002/.
