According to Fidelity’s Retirement Savings Assessment research, while health care workers do have somewhat higher average salaries, the increased savings seem to be due to a savings rate twice the average of all workers. In addition, their savings are invested with a slightly higher allocation to equity.
Fidelity’s Retirement Savings Assessment uses proprietary methodology to estimate the potential percentage drop from preretirement income that the typical working American household is expected to experience upon retirement. Fidelity’s 2012 assessment found that working households with health care workers are estimated to experience a potential income drop of 22% in retirement versus 28% for the general population (see “Income Drop in Retirement Could Be 28%”).
Fidelity found 43% of health care workers have retirement savings in a not-for-profit defined contribution (DC) plan, 18% in a for-profit DC plan, 14% in a taxable account, 11% in a traditional IRA, 8% in a Roth IRA or 401(k) and 5% in an annuity.
The average allocation of savings for health care workers is 55% equities and 45% bonds or cash, compared to a slightly more conservative 48% equities and 52% bonds for all working Americans. Ten percent have all of their savings in cash or bonds (vs. 23%), and 13% are invested entirely in equities (vs. 18%). Eleven percent of health care workers are invested solely in lifecycle funds—similar to the 10% for all working Americans.
In addition, more health care workers (40%) expect to enjoy a health plan provided by a previous employer in retirement than do the general population of workers (33%). For 46% of them, the health benefit will cover both the individual and their spouse. For the remainder, just one individual will be covered.